ORAL ANSWERS TO QUESTIONS

DEFENCE

The Secretary of State was asked—

New Equipment (Expenditure)

Karen Lumley: What his Department’s planned expenditure on new equipment is over the next 10 years.

James Morris: What his Department’s planned expenditure on new equipment is over the next 10 years.

Philip Hammond: Before I answer the question, I am sure the House will wish to join me in paying tribute to the three servicemen who have lost their lives in Afghanistan since the House last met: Captain Stephen Healey of 1st Battalion, The Royal Welsh, who was killed by an improvised explosive device in the upper Gereshk valley on Saturday 26 May; Corporal Michael Thacker, also of 1st Battalion, The Royal Welsh, who was killed by gunfire in Nahr-e Saraj on Friday 1 June; and Private Gregg Stone of 3rd Battalion, The Yorkshire Regiment, who was also killed by gunfire, on Sunday 3 June. We owe them a debt of gratitude for their service and sacrifice, which we will never forget. I know the thoughts of the whole House will be with their families and loved ones.
	I am sure the House will also want to join me in paying tribute to the bravery of the British and American forces involved in the operation to rescue aid worker Helen Johnston and her three colleagues, and to the Afghans for the huge help they provided throughout. The rescue operation was conducted with immense skill and professionalism in the most difficult terrain imaginable. Through this operation, we send a clear message to terrorists around the world that the UK will not tolerate the kidnapping of our citizens.
	As I announced to the House in May, the core committed equipment programme—which covers investment in equipment, data systems and equipment support—amounts to just under £152 billion over 10 years. This includes some £80 billion for new equipment and its support and, for the first time, over £4 billion of centrally held contingency to ensure the robustness of the plan. In addition, the Department has a further unallocated £8 billion in the equipment budget. This will be allocated to projects not yet in the committed core programme only when it is necessary to commit in order to ensure the required delivery, and when the project in question is demonstrated to be affordable and with military advice.

Karen Lumley: May I join the Secretary of State in offering my condolences to all those brave troops?
	My visit to Afghanistan last year served to bring home to me how important it is for our troops that any uncertainty about future equipment supplies is eliminated. Therefore, will my right hon. Friend offer more details on the £4 billion contingency fund that is in place to ensure the robustness of the equipment programme?

Philip Hammond: I agree with my hon. Friend that what our armed forces particularly want to know is that, unlike sometimes in the past, they will always have the protective equipment and the support helicopters that they need. Through our balancing of the equipment
	plan and introducing the £4 billion contingency fund, they will have much greater assurance that that will the case. That is the least we owe to them.

James Morris: Whilst having a long-term plan for defence equipment is crucial for our conventional military capability, does the Secretary of State agree that we also need to be investing in cyber-defence capability, to combat threats to our national security from this rapidly evolving threat?

Philip Hammond: The Department certainly recognises the rapidly evolving threat from cyberspace, and we keep it under constant review. The national cyber-security programme has provided the Department with £90 million, and the Department has allocated some additional funding to increase investment in cyber-security this year, enhancing our existing capabilities. It will also be increasingly appropriate to consider cyber-security issues as an integral part of wider projects that depend on networked command and control capabilities.

Ian Davidson: The sums the Secretary of State mentions are, indeed, substantial and will guarantee thousands, if not tens of thousands, of jobs. How many of those jobs does he envisage will be in Scotland in the event that Scotland decides to be separate?

Philip Hammond: Clearly, at this stage it is not possible to identify how many jobs will be created in different parts of the United Kingdom by the equipment programme we currently envisage. However, we enjoy an exemption from European Union procurement rules in respect of defence capabilities when we are procuring them in a way that protects our national defence capability, and if Scotland were not a part of the UK, it would be competing for defence contracts in the open market along with other providers in Europe and beyond.

Madeleine Moon: Since May 2010, £1,250,000 worth of kit and equipment have been stolen from the Ministry of Defence and its bases across the UK. That includes night vision goggles, body armour, military uniforms and boots, and even an aircraft fuselage. How much of the new spend will be covering unexplained thefts which have not been investigated and for which only one person has ever been prosecuted?

Philip Hammond: The hon. Lady can probably do the maths: she says £1.25 million worth of equipment has been stolen, and I have announced a £152 billion investment, so she can work it out for herself. As a member of the Defence Committee, which asked questions about this matter, she will know that of the equipment listed as stolen, a significant amount has been recovered, but not necessarily netted off against that figure, so in fact the total is probably less than the £1.25 million she suggests.

Alison Seabeck: May I, on behalf of the Opposition, join in the condolences offered to the families of the three servicemen who, tragically, gave their lives serving their nation?
	A decision has been taken to cut the co-operative engagement capability, which was designed, among other things, to enable and support a reduction in the number of type 45s from eight to six. Dropping the programme,
	which has already cost the taxpayer £45 million, therefore poses capability risks. Will the Secretary of State tell the House what were the strategic—not the budgetary—reasons for his changing his mind?

Philip Hammond: I notice that the hon. Lady did not tell the House what was the strategic reason for Labour having delayed the programme for five years, before we grasped the nettle and decided to cancel it. We take decisions on the basis of advice from the Armed Forces Committee, which takes the budget available and decides what the priorities should be. In this case, the First Sea Lord and his colleagues on the Armed Forces Committee have decided that the programme is not a high priority for naval spending.

Life Insurance

Rosie Cooper: What his policy is on providing life insurance for service personnel.

Nick Harvey: The Ministry of Defence provides pensions and compensation for personnel injured due to service, and benefits for the dependants of those whose death is due to service, through the armed forces pension schemes and armed forces compensation scheme. However, we also have a duty of care to ensure that personal accident and life insurance cover is available to those service personnel who consider they require it. This cover is voluntary and separate from the benefits provided by the Government. The Ministry of Defence arranges personal accident and life insurance cover through the PAX and service life insurance schemes provided through Aon Ltd and the Sterling Insurance Group respectively.

Rosie Cooper: I think most military families will not be entirely happy with the Minister’s answer. How much would it cost to provide fully funded—100%—state-funded insurance to all those on the front line, and will he and his Department consider doing that?

Nick Harvey: In a sense, we already provide cover for those on the front line in the matter I have described—through the armed forces compensation scheme and the armed forces pension schemes—so that anyone who suffers in consequence of their military service is compensated appropriately. The hon. Lady will be aware that, after the previous Government ordered an independent review of the armed forces compensation scheme, the amounts payable were substantially increased. If members of the armed services decide, for personal reasons, that they want to seek cover additional to that, we are determined to ensure that they are not disadvantaged or prevented from doing so on account of their service in the armed forces. That is why we intervened in the market to ensure that the schemes I mentioned are available, but it would not be right for us to go out and procure those policies on behalf of individuals: these are personal decisions that those individuals make. We provide death-in-service and injury-in-service benefits; it is up to—

Mr Speaker: Order. Minister of State, I think there is extensive scope for an Adjournment debate on the matter.

James Gray: I will not start an Adjournment debate on the matter, Mr Speaker, but the armed forces compensation scheme, although first class, does not go quite far enough. It was recently reported that as many as 50 soldiers killed on the front line in Afghanistan had no private life insurance at all. Could not the MOD do more both to encourage and to facilitate the provision of private life insurance to everyone on active service in Afghanistan?

Nick Harvey: We do encourage individuals to take out additional cover, but people’s circumstances will vary enormously in terms of mortgage liabilities, the size of their family or anything else they wish to cover for. We heavily subsidise these schemes while people are on active service in Afghanistan, but it would not be right for the state to assume responsibility for this and take it over completely.

Aircraft Carrier Cover

Guy Opperman: What plans he has for maintaining aircraft carrier cover in co-operation with key allies.

Peter Luff: The strategic defence and security review confirmed the Government’s intention to re-introduce a carrier strike capability from around 2020. This capability will be delivered by the Queen Elizabeth-class aircraft carrier, operating the STOVL— short take-off and vertical landing—variant of the joint strike fighter. Until then, the Government have accepted that expeditionary air power will need to be deployed by other means, which may include agreements with allies regarding overflight and basing rights. In addition, the Government are considering the scope for us to co-ordinate carrier strike operations with those NATO allies that currently operate aircraft carriers, including the United States, France and Italy, both prior to and following the re-introduction of the United Kingdom’s own capability.

Guy Opperman: Our future aircraft carriers are being built by our Scottish allies. What happens to the construction of those carriers if Scotland declares independence and does not contribute to the cost?

Peter Luff: As a good Unionist, I must emphasise that the carriers are being built by the United Kingdom, and that many English yards, as well as Scottish yards, are making a fine contribution to these outstanding ships. The best thing that I can say to my hon. Friend is that it is two thirds of a century since the United Kingdom built a warship outside the UK—that happened during the second world war—so the facts speak for themselves.

Nick Smith: The Telegraph conservatively says that it is £250 million, but can the Minister say how much the bad decision to proceed with the F-35C cost? Surely this should include the costs of carrier conversion, too.

Peter Luff: I can confirm what my right hon. Friend the Secretary of State has said on many occasions: as of the end of April, we had committed £39 million on conversion studies and a further £1 million on an air-to-air
	refuelling study. We do not think that the money has been wasted. Changing the variant was considered the best course of action under the SDSR, and these costs were necessarily incurred.

Julian Lewis: Can my hon. Friend confirm that it is our intention to build the two carriers so that both are able to operate fixed-wing aircraft and that we will purchase enough fixed-wing aircraft to operate from both of those carriers?

Peter Luff: I can confirm that both carriers will be built; it will be a decision in the next SDSR as to whether or not both are operated. Similarly, we are following an incremental acquisition policy on the joint strike fighter itself. Therefore, I cannot give my hon. Friend the comfort he is seeking at this stage, as this relates to a commercial negotiation and a strategic decision for the next SDSR.

War Widow Pensions

Richard Graham: What his policy is on pensions for war widows.

Jason McCartney: What his policy is on pensions for war widows.

Andrew Robathan: War widows have our deepest respect for their loss. War widows today span the generations, from those who have lost their husbands in world war two through to those who have died in Iraq and Afghanistan. I would like to take the opportunity to pay tribute to the work of the War Widows’ Association, whose tireless help and support is invaluable. Payments are made through either the armed forces compensation scheme or the former war pensions scheme. In addition, pensions may be paid through one of the occupational armed forces pension schemes.

Richard Graham: I am grateful to the Minister for his reply. My constituent, Iris Thorogood, is an 85-year-old former chairman of the War Widows’ Association, an organisation founded in 1971, at a time when war widows received very little by way of a pension. I am sure that Iris, and indeed the War Widows’ Association, would appreciate confirmation from him that, contrary to some rumours being peddled, war widows have received the full increase of 5.2% this year, in line with disability benefit, and will continue to do so?

Andrew Robathan: First, I pay tribute to Mrs Thorogood and reassure her about the 5.2% uprating of her pension, in line with the Department for Work and Pensions disability benefit. I was very surprised at the recent comments by the shadow Defence Secretary about
	“veterans’ and war widows’ pensions being frozen year-on-year.”—[Official Report, 14 May 2012; Vol. 545, c. 265.]
	That is completely incorrect, and it is a pity that he does not know a little bit more and is not a little bit better informed of such important issues in his brief.

Jason McCartney: Given the unveiling of the Royal Air Force Bomber Command memorial later this month to remember the 55,000 airmen who died during the second world war, does the Minister agree that when we
	are talking about war widows’ pensions, we must give accurate information and not engage in the skulduggery of misleading people about this?

Andrew Robathan: I certainly do, as I believe I have already made clear. I am proud to be an honorary member of the Bomber Command Association, and I look forward to the opening of that memorial at the end of June. We need to remember the debt that we owe to those 55,000 people from Bomber Command who died and to all the others who died in the second world war, as well as to their dependants and their surviving widows.

Maritime Surveillance

Ian Lucas: What recent assessment he has made of the UK’s maritime surveillance capability.

Nick Harvey: The wide range of assets capable of conducting maritime surveillance were reviewed during the strategic defence and security review and decisions were made in the light of our future requirements and the challenging circumstances facing the Government. Due to the financial legacy we inherited from the previous Government, including the woeful mismanagement of the Nimrod MRA4 project, we had little choice but to cancel that project and make a number of other adjustments to our force structure. I believe we have the capabilities we require in this area, but we keep our requirements under close review against operational circumstances. Should the threats change, we stand ready to respond.

Ian Lucas: The Government have made a commitment to additional maritime surveillance with respect to Somalia because of the serious maritime threat posed there. What additional steps are the Government taking to support the Prime Minister’s peace process initiative in Somalia and what steps are they taking on the threat to the peace process caused by piracy?

Nick Harvey: The hon. Gentleman is right to point to the importance of the international efforts being made in Somalia, in which the UK is proud to play a part. Surveillance is certainly a part of the international effort, but the UK did not specifically engage to undertake it—it is done on an international basis, and other allies provide the surveillance capabilities.

Russell Brown: The Minister’s right hon. Friend the Secretary of State has said that he has balanced the budget, but the lack of maritime surveillance demonstrates that he can make such a claim only because he has cut the equipment budget so deeply that he has left our nation with a capability deficit. He cannot deny that we have a capability deficit in terms of maritime surveillance.

Nick Harvey: The hon. Gentleman has answered his own question. If one has had to balance the budget having inherited a £38 billion black hole, inevitably certain capabilities would have had to be deleted. I remind him that the previous Government were using alternative methods of providing maritime surveillance. They
	considered that such methods would be adequate for a two-year period, and we have concluded that they provide sufficient cover for a further period.

London Olympics (Security)

Heidi Alexander: What recent assessment he has made of the armed forces contribution to implementation of security plans for the London 2012 Olympics; and if he will make a statement.

Philip Hammond: The armed forces recently conducted an extensive exercise to test their operational readiness to provide safety and security, in support of the police, during the Olympic and Paralympic games. The exercise achieved its objectives and I am confident that we are well placed to deliver this important role.
	I am grateful to the hon. Lady for the constructive way in which she engaged with the Army on the air defence missile site at Blackheath in her constituency for the exercise, and to her constituents, the overwhelming majority of whom were supportive of it.

Heidi Alexander: The Secretary of State mentioned the proposal to site surface-to-air missiles on Blackheath as part of the Olympic security plan. It is my understanding that a final ministerial decision has yet to be taken. When will that decision be made, and will the Department be in direct contact with residents who live in close proximity to the proposed site to inform them of it?

Philip Hammond: The hon. Lady is right. We have received the military advice on the outcome of the exercise and Ministers will now consider it and make a final decision on the deployment of ground-based air defence systems. As you would expect, Mr Speaker, when a decision is taken, an announcement will be made first to the House, but I will ensure that the Army engages with residents who live in close proximity to the site to ensure that they are aware of all the ramifications of any decision to go ahead and deploy.

Mark Pawsey: Will the Secretary of State confirm that, to ensure effective interoperability between the emergency services and the armed forces, all parties involved with Olympic security will use a common communications platform?

Philip Hammond: The arrangements for effective command and control will involve military commanders being embedded with police gold commanders in their headquarters. I cannot give my hon. Friend a guarantee that they will use a common communications system, but the key decisions will be made by people sitting in the same room. They will then be passed down the respective chains of command.

Rushanara Ali: My constituents living in Bow quarter are rightly concerned about the Ministry of Defence’s plans to base surface-to-air missiles on their rooftops ahead of the Olympics. I wrote to the Secretary of State about that more than a month ago. When does he intend to respond to my request for a meeting to explain the risks to my constituents and answer their concerns? The consultation has been very thin.

Philip Hammond: I am not aware of a request from the hon. Lady, but the Army and MOD officials have engaged with a number of Members of Parliament who have sought a briefing. She is welcome to come to the Ministry of Defence at any time for a detailed briefing. There appear to be a very small number of her constituents who are opposed to the proposal, and there has equally been significant support from other areas. There is no risk to residents of the building. The water tower at Bow quarter was selected on military advice, because it is the right place to locate this particular defensive equipment.

Helen Grant: What has been done to keep local people informed about the deployment of those assets in their communities during the Olympic period?

Philip Hammond: The Army has engaged with local authorities in the first place, and more recently with local community groups. We have a standing Army capability to go out and engage with any groups that want to be engaged with, and to brief Members of Parliament. I am very happy to brief any Members who are affected by the proposals.

Social Housing

David Mowat: What recent discussions he has had with the Secretary of State for Communities and Local Government on access to social housing for former members of the armed forces.

Andrew Robathan: I regularly speak with the Minister for Housing and Local Government and raise such issues as are necessary. My hon. Friend will be aware of the consultation recently undertaken by the Housing Minister on what more can be done, and particularly on statutory guidance on giving precedence in social housing lists to service personnel with local connections when they leave the services.

David Mowat: The Minister will be aware of the recent changes to the housing allowance, which mean that those aged between 25 and 35 will have to share. Exemptions have been announced for those living in homeless hostels and for certain offenders. Will the Government consider also exempting servicemen returning from active duty, particularly those who may be at risk of redundancy?

Andrew Robathan: My hon. Friend will know that Lancashire county council’s Councillor France has expressed his concern, and I am grateful to my hon. Friend for also doing so. We obviously always keep an eye on the matter, but the changes to the shared accommodation rate were discussed between Ministry of Defence officials and Department for Communities and Local Government officials prior to the announcement in June 2010. We will take a look at how we can best serve our personnel, but those who are exempted are those who are considered to be in difficult circumstances, such as people leaving prison. I do not think our personnel leaving the armed forces should be equated with, for instance, those leaving prison.

Andrew Love: The Minister also has responsibility for forces accommodation. The Government recently announced that they would be giving an extra £100 billion, but they forgot to inform the public that they were taking away £141 million. Armed forces accommodation is the largest single issue raised in complaints to the authorities. What will the Minister do to address the sorry state of some of our armed forces accommodation?

Andrew Robathan: First, I should say that we announced £100 million extra, not £100 billion, for accommodation?
	The hon. Gentleman is quite right, but there has been no hiding the fact that we have had a three-year pause in the amount that we have put into forces accommodation. He will know why—we inherited the most ghastly financial situation. I have talked the matter through with the families federations, and they understand that times are very hard. If he does not understand that, he should read the newspapers.

Bob Russell: May I remind the Minister of the armed forces covenant in respect of housing? In his discussions with his colleagues in the Department for Communities and Local Government has he been advised of when the mandatory guidance will be issued to councils on that matter? Will there be more money in significant areas of garrison towns?

Andrew Robathan: We are discussing the matter. I am not sure that mandatory guidance will be given, but there will be guidance on giving preference to those leaving the armed forces. We are very concerned about the matter, and we are continuing to uprate kitchens, bathrooms and so on with the money that we are spending. I know that the hon. Gentleman is as well aware as I am of the difficult situation in which we find ourselves.

Jim Murphy: I want to raise an issue about housing on which I am sure there will be all-party consensus. Recent research by Lord Ashcroft showed that a third of junior ranks in the Army and more than a quarter of those from the armed forces who have applied have been refused a mortgage, loan or credit card in the past five years. Although individual circumstances can always lead to a refusal, that number is far too high. Will the Minister agree to cross-party talks, involving service charities and the military, on how to deal with this and other issues of discrimination raised in the report?

Andrew Robathan: Of course, I am very happy to indulge in cross-party talks on such matters. I talk to service charities the whole time about them. For instance, the right hon. Gentleman talks about mortgages being refused, but that is one thing that we have put right. Although I am not blaming the previous Government in particular, it is a fact that British Forces Post Office addresses were not accepted by mortgage companies. We have now said that they are to be accepted—[ Interruption. ] I hear the hon. Member for North Durham (Mr Jones) saying from a sedentary position that that is not true, but that was what I was told by all the service charities and servicemen to whom I spoke.

Jim Murphy: For the purpose of this question, I shall set aside the partisanship and ask the Minister about the issue again. When one in five members of our
	forces is shouted at in the street and almost as many are refused service in a pub, hotel or elsewhere, we must all go further. There are sensible examples of legal protections for other specific groups that go much further than the military covenant to protect against discrimination, harassment or abuse. In the light of the research, in the build-up to Armed Forces day and as part of these indulged in—or indulgent—all-party talks, will the Minister consider new legal protections for those who keep our country safe?

Mr Speaker: The Minister should make particular reference to access to social housing.

Andrew Robathan: I hear your strictures, Mr Speaker. I am not sure whether new laws are required. What is required is a greater respect for our armed forces and the truth is that most people in this country view our armed forces with great pride, which the four out of five people who are not subject to any form of abuse will recognise. Now, I notice people wearing uniform in the streets much more often, for instance. Once upon a time, that was actively discouraged because one did get abuse, typically from long-haired left-wing students, but that was just when I was young.

Peter Bone: On the question of social housing, a problem that has come up in my constituency is what happens when someone who has been in the armed forces returns to an area from which they have been away. They want social housing, but the local council has a regulation that people cannot get such housing unless they have been there in the past year. Is that something we can put right?

Andrew Robathan: It is, and that is what my right hon. Friend the Minister for Housing and Local Government is talking about. When someone has been away for 10 years —perhaps they have been abroad, serving in Germany with the Army—they should have the opportunity to register for a house and to get precedence in the area where they lived for all their life before joining the armed forces to serve their country.

Gisela Stuart: Birmingham city council was probably the first specifically to ring-fence new social housing provisions for ex-members of the armed forces. Is the Minister aware of any other councils in the west midlands following suit, as, although what Birmingham does is magnificent, it is not sufficient?

Andrew Robathan: Here I call on the help of my civil servants, because I am not aware of any other councils in the west midlands following suit. I applaud Birmingham city council—under, I think, Conservative administration —for putting this to one side—[ Interruption. ] Then under Conservative administration. I applaud the council and, as the hon. Lady will know, we are encouraging the community covenants that lead to such activities.

Mr Speaker: I am sure that the Minister will write to the hon. Lady with further and better particulars when he has consulted his officials.

Andrew Robathan: Of course.

Mr Speaker: We are grateful to the Minister.

Defence Budget

Rebecca Harris: What assessment he has made of the effect on the armed forces of a balanced defence budget.

Nicky Morgan: What assessment he has made of the effect on the armed forces of a balanced defence budget.

Philip Hammond: A balanced budget gives our armed forces confidence that once a project is in the programme, it is real, funded and will be delivered, so that they can plan with certainty. The balanced budget is a firm baseline for the transformation to an armed forces that are smaller, but that will be adaptable, agile, well equipped with the best technology and supported by a Ministry of Defence that is re-focused around their needs.

Rebecca Harris: Will the Secretary of State give me a further assurance that in future we will never again return to an unbalanced defence budget, which saw us buying very expensive, high-ticket items while our brave personnel were going without some of the basic equipment they needed in theatre on the ground?

Philip Hammond: My hon. Friend has put her finger on the problem: in the past we had an armed forces budget that was out of kilter, and were trying to support armed forces that were not properly resourced. The consequences were inadequate protective equipment and inadequate military equipment to do the job they were being asked to carry out. I believe that we have an absolute moral responsibility, when we ask people to put themselves in harm’s way, to equip them with the kit that they need to be as safe as possible in doing that.

Nicky Morgan: My right hon. Friend will be aware that we live in a very uncertain world, in which new threats are evolving—we have already heard mention of cyber-security threats. Is he convinced that now that we have a balanced budget, there is scope to tackle these new threats and to provide the kit that our armed forces need?

Philip Hammond: As my hon. Friend says, we live in a very uncertain world and the threats are changing, and technology also is changing very rapidly. Precisely for that reason, we have kept £8 billion-worth of headroom in the equipment programme, rather than allocating every last penny of it, as was the practice in the past. Too often in the past, we have had to cancel or abandon expensive commitments in order to respond to changes in technology or threat. We should not be in that position in future.

Derek Twigg: In terms of the budget and the impact on armed forces personnel, what is the Secretary of State’s policy on service personnel who have lost a limb or have other disabilities staying in the armed forces? Has an across-the-board decision been taken that anyone who has lost a limb will have to leave, or is it down to individual circumstances or commanding officers?

Philip Hammond: It is down to individual circumstances. We have given a clear commitment that as long as someone who has suffered injuries on active service is in the process of treatment or rehabilitation, where it is appropriate for them to remain in the Army, they will so remain. Once they have completed the rehabilitation process, we will do our very best to find positions that they can fill in the Army. Many service people who suffer disabilities as a result of their service have been found positions that they can continue to hold down in the Army, but we cannot give a guarantee that nobody will be medically discharged after they have completed the rehabilitation process.

Kevan Jones: Given that the Secretary of State’s statement about supposedly balancing the defence budget relates only to the 45% of the budget spent on equipment, how will his announcements this week of compulsory redundancies in the armed forces affect the other, unaccounted for, 55% of the budget? When can we expect the details of how he has balanced the rest of the budget?

Philip Hammond: I am not sure that the hon. Gentleman was here when I made my statement, but he is completely wrong; my statement related to the whole budget, not simply the equipment plan. As he will know, the announcement of a reduction in the size of our armed forces was made last year. We are now making a series of tranches of redundancy announcements, of which the one due tomorrow will be the last for the Royal Navy and the RAF, to get us eventually to armed forces of the size specified for Future Force 2020 in the strategic defence and security review.

James Arbuthnot: The news that the defence budget is balanced is obviously very welcome, but there will inevitably be a certain amount of scepticism about it. Does my right hon. Friend accept that if he is to dispel that scepticism, the sooner he can provide absolute clarity about exactly how he has balanced the budget, and exactly how the £38 billion black hole that Defence Ministers referred to is calculated, the better?

Philip Hammond: I accept that there will be a certain amount of scepticism. In relation to the equipment plan, there are two parts to the answer. First, the armed forces committee has confirmed that the equipment plan that we set out and funded does deliver the capabilities required for Future Force 2020. Secondly, we have submitted the programme to the National Audit Office for review, and we will publish the result of that review in due course. In respect of the 55% of the annual budget that is not taken up by the equipment plan, the proof of the pudding is in the eating, and Members in all parts of the House will look to see a defence budget that comes in within the spending plan total, as they did in 2011-12.

Departmental Procurement

Chi Onwurah: What progress he has made on promoting innovation through his Department’s procurement processes.

Peter Luff: Innovation ensures that we are able to access and deliver technology into our systems and equipment to provide continuing operational advantage to our armed forces. That is why our recent White Paper, “National Security Through Technology”, highlighted the importance of investment in science and technology. It also recognised the contribution of commercial investment in developing new technologies. Using open competition in defence acquisition ensures that we are able to deliver the best and most innovative capabilities at an affordable price. In addition, the success of the Centre for Defence Enterprise in bringing through suppliers new to defence, particularly small and medium-sized businesses, which are important sources of innovation, led to our decision to broaden the centre’s remit, including the mentoring of smaller companies.

Chi Onwurah: During the recess, BAE Systems announced the closure of the historic Scotswood road site in Newcastle, with the loss of more than 300 jobs. This brings to an end a 165-year history of skilled engineering, the longest continuous site of tank manufacture anywhere in the world, as well as bringing great distress and uncertainty to my constituents. Does the Minister agree that refusing to take into account the wider economic implications of defence procurement undermines not only innovation, but jobs and communities across the country? Will he agree to meet me and a delegation from BAE to see what can be done to save the site?

Peter Luff: I have enormous respect for the hon. Lady’s expression of concern for her constituents, and I pay tribute to the work that those people have done over many years to support the armed forces. However, it is not true to say that the policy that she describes is the cause of the problem. The problem is that BAE Systems has not won contracts at this site. Meanwhile, the Warrior sustainment programme, the Scout SV programme, the Foxhound programme and the integration of the urgent operational requirements continue around the United Kingdom, generating thousands of highly skilled and important jobs. I very much regret that BAE Systems has been uncompetitive, but it is not the fault of the Government. The company must answer why it could not compete successfully for contracts.

Departmental Budget

Chris Ruane: What budget his Department will require after 2015; and if he will make a statement.

Philip Hammond: The budget after 2015 will be set at the next spending review. Our current planning assumption is for a flat real-terms budget settlement overall, with a 1% real-terms increase per annum in the equipment and support budget, as agreed with the Treasury.

Chris Ruane: When will the Secretary of State publish the National Audit Office report on the budget and equipment programme? Such impartial information is needed by us as MPs, the public and the defence industry.

Philip Hammond: I completely accept that, and as I said to my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) a few moments ago, I am
	aware of the fact that the degree of confidentiality around the defence budget invites scepticism when such announcements are made. As soon as we have the report from the National Audit Office, we will publish it.

Scottish Independence (Royal Navy Construction Projects)

Iain McKenzie: What assessment he has made of the potential effect of independence for Scotland on Royal Navy construction projects.

Nick Harvey: The defence industry in Scotland, particularly shipbuilding, plays a key role in equipping and supporting the UK armed forces. Defence contracts sustain thousands of skilled jobs and generate billions of pounds for the economy of Scotland. The Government greatly value the highly skilled work force in Scotland. Although the Government are not making plans for separation, as we are confident that the Scottish people will continue to support the Union in any referendum, it is worth noting that the UK has not had a complex warship built outside the UK since world war two. Were we to do so in the future, companies in a separate Scotland would, of course, be free to compete for those contracts, along with international bidders. However, any exemption from EU rules governing public procurement contracts would apply only to warships ordered from our own national yards.

Iain McKenzie: The Minister has made very clear the position of Scottish shipyards, should separation for Scotland take place. Can he clarify the position for suppliers of fixtures and fittings based in Scotland when applying for contracts, if those contracts are given to English shipyards?

Nick Harvey: The way the EU rules work is that if a Government declare something to be warlike, they can claim an exemption from the EU competition rules on the basis of national security. In the case that the hon. Gentleman describes, those contracts would be non-warlike and would be subject to normal competitive rules. Scottish companies would have to win against global competition.

Menzies Campbell: Can the Minister confirm that in the allocation of naval contracts and defence expenditure in general in Scotland, he will give no credence whatsoever to the notion that such expenditure should be governed by something approaching the Barnett formula—an idea which is as naive as it is risible, not least because it ignores strategic objectives, fails to take account of differing geographical levels of threat, and of course, from Scotland’s point of view, ignores the location of industrial capacity?

Nick Harvey: I can confirm for my right hon. and learned Friend that the Government would be governed by no such notion. Scotland does well out of defence at the moment; it has one of the UK’s three naval bases, it will have one of the UK’s three RAF operating bases and it has an Army brigade. Those who would seek to change that situation should spell out what it would look like under a separate arrangement.

Pete Wishart: Scotland also has a disproportionate underspend. The Scottish Government and the Scottish National party are, of course, very much in favour of continuing defence procurement co-operation, regardless of the constitutional situation. We believe that it is good for jobs, for manufacturers and for the taxpayers of both Scotland and England. With so many defence sector jobs in England dependent on Scottish taxpayers’ contributions towards procurement, why do not the UK Government simply concede that it would make perfect sense to continue with procurement co-operation if the Scottish people decide that they want defence decisions to be made in Scotland itself?

Nick Harvey: Defence procurement co-operation of the sort the hon. Gentleman describes would completely contravene EU competition rules. We are allowed to procure non-warlike stores only on an open and competitive basis, so the defence industry in Scotland would have to compete with South Korea, or whichever other country it might be, for future defence contracts.

Regimental Structure (Wales)

David Hanson: What recent discussions he has had on the structure of regiments in Wales.

Nick Harvey: My right hon. Friend the Secretary of State has engaged in a number of discussions about the structure of regiments in Wales and, indeed, those elsewhere in the United Kingdom as part of the study into the Army’s future force structure.

David Hanson: In his speech last Thursday the Secretary of State said that regional identity and recruitment capability were important criteria. Does the Minister accept that 1st The Queen’s Dragoon Guards—the Welsh cavalry—fulfils both criteria and, therefore, every effort should be taken to ensure that the regiment is saved?

Nick Harvey: Any decisions made will respect regional and national identities, but they will have to be made on objective criteria, including geographical considerations that link closely to recruitment and the need to get the right balance of capabilities and the maximum operational output.

Mark Lancaster: We accept that there will be a reduction in the number of regiments, but given that any artificial increase or staying the same of Scottish regiments, some of which were recruited at only 78%, will have a knock-on effect throughout the United Kingdom, does the Minister think that the shadow Secretary of State for Defence consulted his Welsh and English colleagues on the likely effect of keeping an artificial number of Scottish regiments?

Nick Harvey: My hon. Friend is quite right; if we are to see a reduction in the regular Army from 102,000 to 82,000, it is inevitably that some units will be disbanded. The criteria by which those units are selected must be objective, as I have described. They must recognise the
	recruitment strength and the right balance of capabilities. It would not be right for favour to be shown to one part of the country at the expense of another.

Nia Griffith: The Minister will be well aware that Wales provides an above-average number of Army recruits, compared with the UK average, and of the tremendous symbolic importance of having a distinctive Welsh identity when the regiments are redrawn, so will he take both factors into consideration when making his decision?

Nick Harvey: As I have said, the criteria that will be used will be objective, and certainly the contribution of Welsh members of the armed forces is hugely recognised and respected.

Nuclear Deterrent

Priti Patel: How much his Department plans to spend on renewing the nuclear deterrent in the remainder of the spending period.

Peter Luff: The Ministry of Defence plans to invest around £1.4 billion between now and 2014-15 on the assessment phase of the successor submarine programme, as announced to Parliament in May last year. The total cost of the assessment phase, including long-lead items, will be around £3 billion by the time it is complete in 2016-17. Without that investment, it could not be guaranteed that a successor submarine would be available in time to ensure a continuous at-sea deterrent.

Priti Patel: With unfriendly regimes advancing their development of nuclear weaponry, will the Minister give an assurance that the United Kingdom will be defended by the most advanced and effective nuclear deterrent?

Peter Luff: I can assure my hon. Friend that we understand the vital importance of keeping the minimum effective nuclear deterrent for precisely the reasons she sets out so eloquently.

John Woodcock: The decision finally to go ahead is welcomed on the Opposition side of the House, and indeed in my constituency, but the previous Secretary of State put the cost of delaying at between £1.2 billion and £1.4 billion, so is the new Secretary of State’s estimate of the extra cost of delay higher, lower or about the same?

Peter Luff: I must be honest and say that I am not sure what delay the hon. Gentleman refers to, so I suggest that we have a conversation about it later.

Mr Speaker: That is a refreshing outbreak of splendid candour, on which we congratulate the Minister.

Topical Questions

Graham Evans: If he will make a statement on his departmental responsibilities.

Philip Hammond: My departmental responsibilities are to ensure that our country is properly defended now and in the future through the delivery of the military tasks for which the Ministry of Defence is mandated; that our service personnel have the right equipment and training to allow them to succeed in the military tasks; and that we honour our commitments under the armed forces covenant. In order to discharge those duties, I have worked with the chiefs of staff and my senior officials to ensure that the Department has a properly balanced budget and a force generation strategy and a defence equipment programme that are affordable and sustainable in the medium to long term, details of which I have already announced to the House.

Graham Evans: Will my right hon. Friend join me in congratulating the members of the armed forces who played such a splendid role in the magnificent diamond jubilee celebrations, remembering that many of those men and women fought bravely in Afghanistan until recently?

Philip Hammond: My hon. Friend is absolutely right. The relationship between the monarch and the armed forces is historic and important. Her Majesty the Queen, as head of the armed forces, has maintained and strengthened those links throughout her 60-year reign, and she enjoys the deep loyalty and affection of her armed forces. The diamond jubilee celebrations were a welcome opportunity for the armed forces to demonstrate the affection and esteem that they have for Her Majesty.

Gemma Doyle: May I bring to the attention of the Secretary of State the comments of the head of Army manning, who said that the 4,100 soldiers, sailors airmen and women facing redundancy this week should transfer to vacancies in the Army, Navy or Air Force? Does the right hon. Gentleman appreciate how angry this comment has made those who are being rewarded for their years of service with a P45, and can he confirm how many vacancies are currently available?

Andrew Robathan: I have read the article by the head of Army manning, and I am surprised at the newspapers’ interpretation of it. I recommend that the hon. Lady also reads it.
	Those people who are being made redundant and who wish to apply for another job are, of course, encouraged so to do, be it in the Army, the Air Force or the Royal Navy. When I served in the Army, there were people from the Air Force and from the Navy who had transferred and joined—and some from the foreign legion as well.

Marcus Jones: I welcome the MOD’s recent award of a £350 million contract to maintain the Royal Air Force’s Hercules aircraft, which will sustain 500 UK jobs. Can the Minister say what other steps are being taken to support the UK defence industry?

Peter Luff: Absolutely I can. I too welcome the award of the Hercules integrated operational support contract,
	which will save the MOD £170 million by replacing several short-term contracts with one overarching contract. It is another example of the policy that we set out in our recent White Paper, with a list of measures to improve the lot of the British defence industry, including a £160 billion equipment programme, strong support for responsible exports, support for small and medium-sized enterprises in the defence sector and strong support for the previously declining science and technology budget.

Mary Glindon: When Sir John Holmes reports on his review of the medals system, is the Prime Minister likely to keep his pre-election promise so that after 67 years the surviving Arctic convoy veterans at last receive a British medal in acknowledgement of their brave service?

Philip Hammond: Perhaps I should be clear that the remit of the medals review is to look at the process and at the factors that are taken into account when making such decisions. So the review will look at the framework and the basis on which decisions are taken, and it will then be for individual decisions to be reviewed within any new framework that is put in place.

John Baron: Defence diplomacy is a key component of Britain’s soft power capability. What steps are the Government taking to ensure that defence diplomacy is therefore at the forefront of our foreign and defence policy, and will the Minister highlight some of the programmes currently being pursued in the MOD?

Gerald Howarth: May I say, with all honesty, that I am most grateful to my hon. Friend for his question? I know that he takes a very keen interest in the issue, and he is absolutely right to emphasise the importance of defence diplomacy as a very cost-effective and vital part of our armoury. It is one of seven military tasks set out in our 2010 defence review, and together with the Foreign and Commonwealth Office we are now finalising a detailed defence engagement strategy. That will set out the contributions made by, for example, defence training, defence attachés, defence advisory teams, de-mining and, as in Pakistan, the help to develop a centre of excellence for counter-IED capability, to which of course I add defence exports and the role played by Ministers and senior military officials in travelling throughout the world in support of defence diplomacy—I having visited no fewer than 23 countries in the past two years.

Lindsay Roy: How will the Minister protect the rich legacy of the Scottish regiments, particularly in respecting the historical identities and cap badges of proud battalions such as the Black Watch, in any military cutbacks?

Nick Harvey: The Prime Minister, the Defence Secretary and I have all made it clear that the traditions of the Scottish regiments will be respected. There is not, and never has been at any stage, a plan to do away with those identities, which will remain in the long term as part of the Army in Scotland.

David Mowat: This afternoon we have heard the Minister speak of the objective criteria that will be used to determine how the
	infantry will be cut. For the avoidance of doubt, will he reassure the House that one of those criteria is not the upcoming Scottish referendum?

Nick Harvey: To recap, the criteria that will be used are the geographical footprint for recruitment, the right balance of capabilities, and the maximum operational output, not political considerations between different parts of the UK.

Ian Davidson: Will the relevant Minister tell me what will happen to Fijians and other Commonwealth citizens serving in Scottish regiments, and indeed to the Scottish regiments themselves, in the event of separation?

Andrew Robathan: The hon. Gentleman asks a very good hypothetical question to which I do not have an answer, but I very much hope that the good people of Scotland will show some sense in a referendum.

Andrew Turner: May I welcome the arrival of the new C-17 aircraft, which plays a vital role in transporting our troops and our equipment, and ask the Secretary of State to add to that?

Philip Hammond: Yes. I am happy to say to my hon. Friend that I went to Brize Norton to see the new C-17 aircraft a couple of weeks ago, just a few days after it had been delivered. This aircraft will reinforce the vital, strategically important air bridge with Afghanistan, which is especially important at a time when the ground lines of communication through Pakistan are closed. In the longer term, the C-17 represents a step change in our capability to support operations, including humanitarian operations and disaster relief, and, very importantly, to support the aero-medical evacuation of wounded personnel back to the United Kingdom.

Nick Smith: Given that there is clearly concern on both sides of the House, may I press the Minister on when we will get a full statement to Parliament on the future of our regiments, particularly the well-loved Welsh Cavalry?

Philip Hammond: The Chief of the General Staff is in the final stages of an analytical review of recruiting demographics and manning across the Army, looking at the future needs of the Army but also at the very important historical threads that run through the Army. As soon as we have completed that exercise, I will make a statement to the House, and I confidently anticipate that that will be before the summer recess.

James Morris: Encouraging strong leadership in our armed forces is vital to the development of an agile fighting force, so will the Secretary of State join me in welcoming the recent appointments of Commander Sarah West and Commander Sue Moore, both of which are major milestones demonstrating the achievements of women in the armed forces?

Andrew Robathan: The House will know that Commander West has been appointed as the first woman commander of a major warship, HMS Portland, and that Commander
	Moore has become the first woman to command 1st Patrol Boat Squadron. Both appointments were made entirely on merit, and they are very well deserved. I think that the whole House would wish to congratulate those two women and all others who come into such positions of authority.

Chi Onwurah: In response to my earlier question about the closure of BAE Systems on Scotswood road, the Minister seemed to prefer to criticise BAE Systems, and therefore some of my constituents, than to answer my request for a meeting to see whether we could find a way to save these jobs.

Peter Luff: It is always a pleasure to meet the hon. Lady. I extended an invitation to her to discuss another subject, but she did not respond. I am always happy to meet her—[ Interruption. ] On the strictly professional matter of innovation. I intended no criticism of her constituents whatever. They have done a first-rate job. However, the other companies put in lower, better value bids and so won the contracts. That is the problem, and there is no answer to that.

Jo Swinson: An effective and trusted Afghan national army is key to a smooth transition. When I visited Afghanistan last year, I heard that although recruitment is going well, attrition remains a challenge. Will the Secretary of State look into the fact that attrition rates are not monitored for the different ethnic groups, so we do not know whether there is more of a problem with the Tajiks, Pashtuns, Hazaras or Uzbeks? That information would surely be useful in addressing the problem.

Philip Hammond: I am grateful to the hon. Lady. My understanding, although I will have to check this, is that attrition is measured by ethnic group in the army. I will take the matter up with my Afghan counterpart on my next visit and let the hon. Lady know what I find out.

John Woodcock: How is the review into the alternatives to Trident going?

Nick Harvey: The review is making good progress and is on target to report to the Prime Minister and the Deputy Prime Minister at the end of the year, as was announced by the previous Defence Secretary.

James Wharton: The cadet forces provide great opportunities for young people to train in teamwork, leadership and discipline. I very much enjoyed being a cadet when I was at school. What is the Department doing to ensure that more young people avail themselves of those wonderful opportunities?

Andrew Robathan: We are very keen to encourage more cadet forces. Indeed, I had a joint conference with the schools commissioner at the end of April on this matter.
	We are pushing it forward and will find the resources. I am delighted that my hon. Friend gained from the cadet experience and learned about things such as integrity, teamwork and leadership. I, too, was a cadet, but I will leave it to the House to determine whether my character improved.

Elizabeth Truss: Given that the Government are proceeding with the short take-off and vertical landing variant of the joint strike fighter, will the Secretary of State say when a decision will be made about the basing of that aircraft? Does he agree that RAF Marham would be an ideal location because of its engineering facilities and its proximity to the US base at Lakenheath?

Philip Hammond: My hon. Friend is nothing if not diligent in promoting the case for RAF Marham to be the home base of the STOVL JSF aircraft. We are well aware of its engineering capabilities and of its proximity to USAF Lakenheath, where F-35s are likely to be based. The decision does not need to be taken yet, and it will not be taken until it needs to be.

Stephen Gilbert: In the United States, the rate of suicides by active military personnel is almost one per day, which is higher than the rate of combat casualties. What are the equivalent figures for the three UK armed services?

Andrew Robathan: Any suicide is a tragedy. The UK has much lower rates of suicide in the armed forces than the US. Research is being done on the matter as we speak, in particular by Professor Simon Wessely of King’s College hospital. Although we remain concerned, for people over 25, service in the armed forces means, curiously, that one is less likely to commit suicide than others. I am happy to discuss the matter further with the hon. Gentleman.

Mr Speaker: Last but not least, Mr Duncan Hames.

Duncan Hames: Next month, the UK will join other Governments at the United Nations to negotiate and agree an international arms trade treaty. We are often told that Britain’s arms controls are among the strictest that one will find anywhere. Does the Minister recognise the benefit to Britain and the world of reaching a strong agreement with as many countries as possible, even if certain countries opt not to become signatories at this time?

Nick Harvey: The UK is strongly committed to an arms trade treaty and is pushing for it to be as broad and effective as possible. We are encouraged by the fact that certain countries that we did not think would be supportive are showing more encouraging signs as we get near to the negotiations.

Changes to the Budget

Rachel Reeves: (Urgent Question): To ask the Chief Secretary to the Treasury to make a statement on the changes that the Treasury has made to the Budget, which was presented to this House on 21 March 2012.

Hon. Members: Where’s the Chancellor?

Mr Speaker: Order. The Ministers who appear are chosen by the Government, and it is not for me to explain that choice. Members ask, “Where’s the Chancellor?” The Chancellor is appearing before the Leveson inquiry, as Members know perfectly well. We welcome Minister Gauke.

David Gauke: The Budget supports working families and re-establishes the UK’s reputation as a leading place to do business. It continues to deal with the record peacetime deficit that we inherited, so that the state no longer borrows £1 in £4 it spends, as it did when we came to office.
	The Budget contained 282 measures. Having said that we would consult on some of its measures, we have made changes to three. On VAT for hot food, it is right to end anomalies and ensure that VAT is applied fairly between businesses. Where fish and chip shops had to charge VAT, supermarkets selling the same products did not. Having consulted, we have revised the relevant tests to ensure that, for example, bakers cooking hot savoury food that is left to cool are not caught in the changes.
	On VAT for static holiday caravans, we have listened to hon. Members, who argued that static caravans should be treated more akin to second homes and not like touring caravans. Given that static holiday vans fall in a grey area between residential properties and temporary holiday accommodation, and given the relevant tax regimes that apply to them, a 5% rate of VAT is a fair compromise.
	On tax reliefs, we continue to think that the system we inherited—which allows the wealthiest to pay the least tax, meaning that cleaners can pay a higher rate than their bosses—is unfair. We will therefore move to cap reliefs to ensure that this is addressed. However, having engaged with the sector, we will exclude reliefs relating to charitable giving from the cap.
	These changes are small in the context of a Budget that lowered tax by £170 for 24 million people. The amounts concerned are tiny compared with the total tax changes announced in the Budget—in monetary terms, less than 2% of the Budget changes and 0.0002% of total receipts. The Budget continues to have a neutral impact on the public finances, and we remain on track to tackle the unprecedented debt and deficit we inherited. This is a Budget that improves the country’s competitiveness by cutting the top rate of tax, reduces corporation tax to give the UK the most competitive rate in the G20, and rewards and supports hard-working families by helping to take 2 million people out of income tax altogether.

Rachel Reeves: I thank the Minister for his answer, but regret the absence of both the Chancellor and the Chief Secretary to explain this series of U-turns.
	This statement leaves a number of questions unanswered. On 16 April, the Exchequer Secretary told the House:
	“The same approach should apply to mobile caravans as to static, non-residential caravans, and to a hot pie served in a fish and shop and one served in a bakery.”—[Official Report, 16 April 2012; Vol. 543, c. 130.]
	On 12 April, in relation to the proposed cap on income tax relief for charitable donations, he said:
	“The policy that we’ve announced is a sensible one.”
	What new evidence has come to light since then and during the recess that has led the Government to change their mind? The reality is that the facts have not changed. This is a Government who do not like to be held to account for their mistakes. The Minister has tried to make a virtue out of the Government’s abandonment of policies that prove to be unpopular and unworkable by saying that they are listening. However, failing to do the necessary work on a policy before announcing it and then sneaking out a reversal when they hoped no one was looking is not consultation—it is total incompetence. Is it not the truth that this Government were so desperate for money-making measures that they took from whomever they thought they could, hoping to get away with it? The result: a total and utter shambles of a Budget.
	The mistakes that are still in the Budget are, however, the worst ones of all: a tax cut for millionaires while asking millions to pay more, and no plan for the jobs and growth that we desperately need to get our economy back on track and our deficit down. As the Minister and his colleagues are making such a virtue of listening and of their readiness to change course and make the occasional U-turn, perhaps now they will listen—to the millions of pensioners hit by the granny tax; to the millions of families hit by cuts to their tax credits; to the 1 million young people out of work; to the businesses struggling to break even; and to everyone in this country suffering from the double-dip recession made in Downing street and crying out—[ Interruption. ]

Mr Speaker: Order. The House needs to calm down, on both sides. I remind the shadow Chief Secretary to the Treasury that the narrow focus of the question covers changes to the announced policy. I know that she will concentrate on that narrow matter, as this is not a Second Reading debate on the Budget.

Rachel Reeves: Given the number of U-turns that the Government have made in the past two weeks, it is difficult to know where to start. Will they now change course on the biggest mistakes in the Budget—cutting tax credits for working families, the granny tax and cutting tax for millionaires while asking ordinary people to pay more? The country is crying out for the Government to change course and to get a grip on their policies, which dug us into this hole and this recession.

David Gauke: The hon. Lady says that the Government were desperate for money-making measures. Why does she think we needed such measures? She might have noticed that her party left the biggest peacetime deficit we have ever faced. The extraordinary thing about the Labour party is that it always believes that there is a magic money tree that we can get money from. I am
	afraid, however, that we have to take steps to reduce the deficit. Even with these changes, we remain on the course that we set out. This was a fiscally neutral Budget, and we are not taking risks with the public finances, which is the U-turn that the Opposition want us to take.
	The hon. Lady asked how a Budget could be changed and why we had departed from what it set out to do. I should like to remind the House what happened four years ago. In 2007, the then Chancellor of the Exchequer announced the doubling of the 10p rate. A year later, his successor had to come to the House—not in a Budget, but weeks later—and set out additional tax cuts of over £3 billion. They had got their policy wrong and they had destroyed their credibility by doubling the income tax rate for the poorest earners in this country. That is an example of a Budget shambles.

Peter Bone: The Government should not apologise for making these U-turns. This is parliamentary democracy at work. It is because Members of this House argued strongly for changes in the Budget that such changes have occurred. Let us contrast that with what happened under the last Government. When their own Back Benchers asked for changes, the Government would not agree to them. This Government should be proud of these changes; they should not apologise.

David Gauke: I am grateful to my hon. Friend for his characteristically helpful intervention.

Stephen Timms: The Minister is now telling us that the Government do not need the money that would have been raised by the measures that he has scrapped, so why were they announced in the first place?

David Gauke: Let us put this into context. In the last year of the forecast period, the Budget measures that we announced in March would have resulted in an additional £1.14 billion for the Exchequer. As a consequence of these changes, that figure will now be £1 billion. These are relatively small items, but we have listened to the specific cases that have been made on the three elements. We had already made it clear that we wanted to consult carefully with charities and philanthropists on one of them. We have listened to the arguments and we have made changes. In the overall scope of the public finances, however, they will not make a significant difference.

Several hon. Members: rose —

Mr Speaker: Accommodating the interests of colleagues will require brevity, to be exemplified by Mr Jacob Rees-Mogg.

Jacob Rees-Mogg: Does the Minister agree that the real things that must not be changed are a tight fiscal policy and a loose money policy? There is no alternative.

David Gauke: My hon. Friend is absolutely right: this Government, in contrast to the Labour party, remain committed to getting the public finances under control.

Helen Goodman: The Minister did not mention the reverse on VAT for listed places of worship. My constituency has the oldest Baptist church and the oldest Methodist church, so do the changes announced by the Government on listed places of worship apply only to the Church of England or to all denominations?

David Gauke: They apply to all denominations, but to provide further clarity we made it clear that we would change the level of grant available under the listed places of worship scheme to reflect the need; after consultation with the Churches, we have increased that number, but there is no change to the tax law relating to VAT for listed places of worship.

Simon Hughes: Let me reassure the Minister that Liberal Democrats welcome the change both to the pasty tax and the caravan tax. [Interruption.] We would also have liked a third change—to keep the top rate of income tax, but we did not win that argument. Will the Minister join me and make sure that all Ministers turn up the volume—[Interruption.]

Mr Speaker: Order. This is most discourteous. We must hear the voice of Bermondsey and Old Southwark— Mr Simon Hughes.

Simon Hughes: Will the Minister ensure that all Ministers turn up the volume to get over the central message of the Budget, which is that over 20 million pay less tax and millions pay no tax at all? Clearly, some people have not heard it yet.

David Gauke: This coalition Government are proud of the fact that we are taking 2 million people out of income tax and cutting the tax for 24 million basic rate taxpayers.

Several hon. Members: rose —

Mr Speaker: Let me remind the House that the urgent question relates to the subject of changes made by the Treasury to the Budget presented to the House on 21 March. Questioning must be focused on that narrow terrain. I know that in that respect we can rely on Mr Stewart Hosie.

Stewart Hosie: The Minister said that these U-turns, however welcome, would be neutral in terms of the Budget, so will he confirm that by the time we get to 2016-17 the Government will still take out of the economy £155 billion a year in tax increases and service cuts?

Dennis Skinner: Whatever happened to independence?

David Gauke: The Government remain committed to their deficit reduction programme.As pointed out by the hon. Member for Bolsover (Mr Skinner), the hon. Gentleman presumably thinks that Scotland will pursue a different approach by that time.

Mel Stride: May I pass on a huge thank you to the Chancellor and to the Minister from Pathfinder Park Homes, a manufacturer of static caravans in my constituency, which is delighted with the reversal on VAT? In its view, it has saved its business.

David Gauke: I am grateful to my hon. Friend for his comments, and I am sure that his constituents are grateful to him for the work he has done on this matter.

Simon Danczuk: What estimate has the Minister made of the damage done to the bakery industry as a result of announcing a policy that has now been reversed?

David Gauke: Given that the policy does not come into effect until 1 October, we do not think any damage will have been done through the policy. We think that addressing the anomalies is the right thing to do, and we have taken the opportunity to improve the policy we initially announced.

Harriett Baldwin: Evidently, the most urgent question relating to the Budget changes are those to VAT on static caravans and hot pastries, while across the channel we literally have financial Armageddon happening. What would the Minister contrast between the management of this country’s finances and the management of those of Europe?

David Gauke: This Government are determined to focus on the big issues we face. As a Government, we are showing determination to ensure that the UK remains in a safe place.

Mr Speaker: I am grateful for the Minister’s diplomacy, but let me say gently to the hon. Lady that the question was not quite as wide as the channel—but it was not far short of it!

Seema Malhotra: Will the Minister confirm what extra information came to light during the recess that led to the U-turn on the charity tax?

David Gauke: In respect of all the measures we are discussing today, this Government have been listening to the arguments. As far as charities are concerned, once we had reached the conclusion that we would not proceed with a cap on relief for charitable giving, we felt it only fair to make the announcement as soon as we could—and we did so.

Alec Shelbrooke: Before I feel tempted to congratulate the Minister on the changes he has made, I should perhaps declare a personal prejudice and a personal interest in the reduction in VAT on pasties.
	Welcome as the Minister’s consultation with Back Benchers has been, may I ask him to continue to focus on the main aim of the Budget, which is to ensure that we do not go down the same road as the rest of Europe?

David Gauke: I am not sure that that particular policy announcement will necessarily do my hon. Friend any
	good, but he is absolutely right to ask the Government to continue to focus on the big issues that the country faces, and we will do so.

Tom Blenkinsop: Given that other applications of VAT are being U-turned, why is its application to sports nutrition products not being U-turned as well?

David Gauke: We think it right for sports nutrition products to be subject to the standard rate of VAT. VAT should be a broadly based tax, and we believe that our policy addresses an anomaly in the system that needed to be dealt with.

Tony Baldry: We had almost a full day’s debate on these measures, initiated by the Opposition, and the changes made by my hon. Friend are almost exactly the changes for which the Opposition asked. Given that my hon. Friend and his colleagues have listened to Opposition Members, would it not be rather better for them simply to say “Thank you” and sit down—as I say “Thank you” to the Chancellor and his colleagues for the changes in respect of VAT on listed places of worship?

David Gauke: We could live in hope, but I suppose that that was never going to happen.

Wayne David: There is only one word to describe the Budget, and that is “omnishambles”, but will the Minister tell us what changes have been made to VAT on skips?

David Gauke: There have been no such changes. HMRC produced operational guidance, which I understand was misinterpreted by the industry. HMRC has clarified its guidance, but there has been no change in the policy or operational position relating to skips.

Claire Perry: Marshall’s Bakery in Pewsey, which is in my constituency, will be delighted by the news, as the Minister will know because he received a large petition from its customers. I am proud to be part of a Government who listen to people, but will the Minister please assure me that he will never, ever listen to any economic advice from the Labour party, whose view is that the way to get out of a borrowing crisis is simply to borrow more?

David Gauke: I can assure my hon. Friend that we will not be listening to those who think that the best solution to debt is to borrow more.

Andrew Gwynne: So much has been changed in this disastrous Budget that one wonders what will be next. Will the Minister now start to rethink his tax cut of £40,000 a year for 14,000 millionaires, which is, quite frankly, outrageous?

David Gauke: Let me point out to the hon. Gentleman that three changes have been made in the 282 measures announced in the Budget. As for the 50p rate, the problem was that it did not raise any money. The measures that we have announced will raise five times more money from the rich than the policy pursued by the Labour party.

Stephen Gilbert: On behalf of the thousands of people who supply, make and sell the £180 million of Cornish pasties produced each year, and the millions of people throughout the country—including my hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke)—who enjoy eating them, may I say “Thank you” to the Minister? It is great that we finally have a Government who listen and do not plough on regardless.

David Gauke: I am grateful for the constructive way in which my hon. Friend and other Cornish Members have engaged in this process throughout.

Helen Jones: Will the Minister explain why he chose to listen to representations on pasties, caravans and charities, but not to representations on the granny tax? Was it because pensioners do not have loud enough voices, or because he does not care about them?

David Gauke: No. It was because we found the arguments on the three items that we are discussing today persuasive that we decided to make the concessions we have made.

Michael Ellis: Will the Minister join me in welcoming the comments of the chief executive officer of Greggs that the Government should be “applauded” for the way in which they have “conducted themselves”, and for listening to the views of the industry? Will he also acknowledge, as Sir Terence Leahy has, that the Government should maintain their course and— unlike the Labour party—keep the British economy sound?

David Gauke: Again, I am grateful to my hon. Friend for his comments. We have listened to strong arguments and responded accordingly. That is what a sensible Government do—and I really must contrast that with the approach taken by the previous Government, in particular with regard to the 10p rate of income tax.

David Hanson: Does the Minister agree that business stability is important and that, for example, a caravan tax rate of 0%, 20% and 5% in six weeks is not good for business planning? Has he written to his hon. Friends who voted for those measures to apologise for hanging them out to dry?

David Gauke: Many Members on the Government Benches engaged with this issue in a constructive and thoughtful way, and helped us reach what I think was the right conclusion.

Richard Graham: Most of my constituents want their Government, regardless of political hue, to be a Government who listen and appreciate their views. In this case, the changes made by my hon. Friend and the Treasury team have hugely benefited listed places of worship, which are an important part of our regeneration campaign, and an important local company, Janes Pantry, which makes pasties. They have also been much appreciated by all of us who donate to charities. We cannot have it both ways: we cannot have a Government who listen and then criticise them when they do. I am grateful to the Government.

David Gauke: As the Chancellor recently said, if there is one thing worse than a Government who listen, it is a Government who do not listen.

Nicholas Dakin: Unfortunately, the Exchequer Secretary’s attempt to clarify the skip tax appears to have added to the confusion. Will he engage with the industry in the same spirit as he has engaged with others, and consider the eligibility of fines residue from trommel equipment being eligible for the lower rate of duty?

David Gauke: My understanding is that Her Majesty’s Revenue and Customs is continuing to work with the industry to provide clarity in this area. There have been concerns; I think there was a misinterpretation of earlier advice and I believe that that is in the process of being addressed.

Jason McCartney: I greatly welcome the consultations, but will the Minister confirm that the Government will stand firm on the main facets of the Budget, which have resulted in tax cuts for 25 million people, council tax frozen for the second year running and fuel duty being 10p lower than it would have been under the other lot?

Mr Speaker: Order. I did not hear a question about changes, but the hon. Member has registered his view with force and alacrity, and it is on the record so his constituents will hear it.

Sheila Gilmore: The Minister started by saying that this was a Budget for families, so will he now consider another U-turn and restore the tax credits to working couples on low wages and low working hours?

David Gauke: rose—

Mr Speaker: Order. I am sorry if I did not explain the position sufficiently clearly—although I must say I thought I did. Some Members are making speculative bids for extending the U-turns. They may wish to do so, but the terms of the urgent question relate specifically to the announced changes. I am sure that understanding that point will not be beyond the ingenuity of the hon. Member for Wansbeck (Ian Lavery).

Ian Lavery: On the announced changes—the U-turns—on everything from buzzards and skips to caravans and pasties, when will the Government reconsider a U-turn on the granny tax and the cut in the tax on the rich people in society?

Mr Speaker: I am disappointed in the hon. Gentleman. He started out as such a good boy, and it is a pity that he spoiled that thereafter. I know that a similar sin will not be committed by the hon. Member for Kingston upon Hull East (Karl Turner), because he is a good listener and a quick learner.

Karl Turner: I welcome the Government’s U-turn on the caravan tax, which would have adversely affected many thousands of people throughout the country. However, will the Minister take this opportunity to apologise to the 350 employees
	of Willerby Holiday Homes in my constituency who were told that they would potentially be made redundant as a result of the Government’s barmy idea, and will he describe the effect on the industry of the introduction of the 5% tax on caravans?

David Gauke: First, let me say that I am grateful to have an opportunity to return to the Dispatch Box. On the point the hon. Gentleman raises, I really do not think that the changes, which in our original proposals would not have come into effect until October and which now will not come in until April, can be the source of some of the current difficulties within the caravan industry. We think we have the right policy now and that a 5% rate is fair.

Syria

William Hague: With permission, Mr Speaker, I will make a statement on Syria.
	The whole House will be united in support for the Syrian people. They have endured 15 months of fear and suffering. Eighty-seven thousand people have fled to neighbouring countries and up to 500,000 are internally displaced. As many as 15,000 people may have died, and thousands of political prisoners are imprisoned and at risk of mistreatment and torture.
	Each day, reports emerge of savage crimes. The Syrian military are surrounding and bombarding towns with heavy weaponry, then unleashing militia groups to terrorise and murder civilians in their homes. Those deliberate military tactics are horrifyingly reminiscent of the Balkans in the 1990s. Two weeks ago in al-Houla, 108 civilians died in this manner, including 49 children under the age of 10. A similar atrocity appears to have been committed last week in al-Qubair, where 78 people were killed, including women and children. UN monitors attempting to report on those events have been shot at and obstructed.
	These grotesque crimes have illuminated to the world the nature of the events in Syria and the conduct of the Assad regime. It is attempting, with utter inhumanity, to sow terror, to break the spirit of opposition in Syria and to try to reassert control. This is as futile as it is morally reprehensible. By branding their opponents terrorists and using tanks against them, the regime is driving Syrians to take up arms to defend their homes; and by singling out particular communities, it is inflaming sectarian tension. There are credible reports of human rights abuses and sectarian attacks by armed opposition fighters, which we also utterly condemn. We also have reason to believe that terrorist groups affiliated to al-Qaeda have committed attacks designed to exacerbate the violence, with serious implications for international security.
	As a result, Syria today is on the edge of civil war. That could lead to thousands more casualties, a humanitarian disaster and human rights violations on an even greater scale, and instability in neighbouring countries. We are working intensively to find a peaceful means of resolving the crisis. Our approach, in close coordination with our European partners is: first, to push for implementation of the Annan plan as the internationally agreed road map to end the violence; secondly, to increase the pressure and isolation felt by the regime; and, thirdly, to ensure justice, accountability and humanitarian assistance for the Syrian people. I will take each of those in turn.
	First, the United Nations and Arab League envoy for Syria, Kofi Annan, has set out a six-point plan to end the violence and to start a political process to address the legitimate aspirations of the Syrian people. It is backed by two UN Security Council resolutions, 2042 and 2043. The latter mandated the deployment of the 300 UN monitors who are now on the ground in Syria. I pay tribute to them for their difficult work in dangerous circumstances. As Kofi Annan has made clear on many occasions, the onus is on the regime to call off its military assault, to adhere to a ceasefire and to allow a process of political reform. Political transition must be based on democratic principles and reflect the needs
	of all Syria's minority communities, including Kurds, Christians and Alawites. On 1 April, the Syrian regime committed itself to implementing the Annan plan, and on 12 April it announced a ceasefire. It has not kept either of those commitments.
	Two weeks ago, I discussed the situation with my Russian counterpart, Sergei Lavrov, in Moscow. I made the case for Russia to use its crucial leverage with the Assad regime to ensure the full implementation of the Annan plan, since the collapse of Syria or descent into civil war would be against Russian interests as well as those of the wider world. I also raised the issue of arms sales to the Syrian regime, which we believe should be stopped immediately.
	In Istanbul, on 1 June, I held talks with members of the Syrian National Council and other opposition representatives, including Kurds, and I returned there last week for discussions with Secretary Clinton, the Turkish Foreign Minister and the Foreign Ministers of 12 European and Arab nations. I am in regular contact with Kofi Annan, and preparations are in hand for a meeting of the friends of Syria group, which now numbers more than 80 countries, in early July.
	Last Thursday, the Russian Government put forward their own proposal for an international conference on Syria. Such a meeting could help generate momentum behind the Annan plan. However, it would have to be a meeting that led to a change on the ground, and did not just buy time for the regime to kill more innocent people. So, in our view, any such meeting would need to be based on a common understanding that it would lead to a political transition; it should include genuine steps to implement the Annan plan; and it should only involve nations that are committed to being part of the solution in Syria. We will discuss with our partners whether it is possible to agree concerted international action on this basis; my right hon. Friend the Prime Minister will take forward these discussions with other Heads of Government when he attends the G20 meeting in Mexico next week.
	Making a success of the Annan plan also requires the Syrian National Council and other opposition groups to put aside their differences, to unite around the common goal of a democratic transition and to assure all Syria’s minorities that their rights will be protected in a multi-ethnic and democratic Syrian state. This has been my consistent message in all my discussions with opposition figures. We welcome the meetings with opposition groups that will be held in Istanbul later this week and subsequently in Cairo, which have our active support.
	The Annan plan is not an open-ended commitment; it cannot be used indefinitely by the regime to play for time. If it is not implemented, we will argue for a new and robust UN Security Council resolution aimed at compelling the regime to meet its commitments under the plan, and requiring all parties to comply with it. So we have already begun discussions at the Security Council on the elements of a resolution. We do not want to see the Annan plan fail, but if, despite our best efforts, it does not succeed, we would have to consider other options for resolving the crisis and, in our view, all options should then be on the table.
	Secondly, we are taking steps to increase the isolation of the regime. On 29 May, we expelled three Syrian diplomats from London, including the chargé d’affaires, in co-ordination with the United States, Canada, Australia,
	France, Germany, Japan and other countries that took similar steps. We are also in discussions with Arab League and like-minded countries about measures to tighten the stranglehold on the regime’s resources and external sources of support, building on the 15 rounds of EU sanctions that already target 128 individuals and 43 entities.
	Thirdly, we are acting to help end impunity for atrocities, and we are supporting the humanitarian needs and legitimate aspirations of the Syrian people. Britain co-sponsored the UN Human Rights Council resolution of 1 June, which was carried by 41 votes to three. It condemned the al-Houla massacre, mandated the UN commission of inquiry to investigate and gather evidence about it, and highlighted the recommendation of the UN high commissioner for human rights that the UN Security Council should refer Syria to the International Criminal Court. We are working on a further UN Human Rights Council resolution to reinforce these objectives.
	We also sent a team of British experts to Syria’s borders in February and March to gather testimony from Syrians. The team found evidence of violations of international law and international human rights law, including murder, rape, torture, unlawful imprisonment, enforced disappearance and persecution. This work to document abuses is being continued. The team of Syrians that helped to document the al-Houla massacre was trained by the United Kingdom, and we are working closely with the United States and the UN commission of inquiry to ensure that any evidence is collated and stored for use in a future legal process. We are also increasing UK funding for the Syrian opposition and civil society groups, providing £1.5 million of assistance in this financial year to help provide human rights monitoring and media training for activists, and other non-lethal support, such as communications equipment.
	My right hon. Friend the Secretary of State for International Development and his Department are working with the UN and the international community to ensure that urgent humanitarian assistance gets to the 1 million people estimated to be in need. The Syrian regime has now agreed a plan to respond to humanitarian needs. There can be no further delay in its implementation, and humanitarian agencies must be allowed full and unhindered access to all areas in Syria. Britain has helped to provide emergency food supplies for nearly 24,000 families inside Syria, safe drinking water for 30,000 people, blankets for 5,000 people, medical assistance for up to 25,000 people and support to refugees in neighbouring countries.
	The coming weeks must see an intensified and urgent international effort to stop the violence and restore hope to Syria, and the British Government remain absolutely focused on this goal. If all the efforts I have described fail, Britain will work with the friends of Syria group to increase further the isolation of the regime and to adopt sweeping new sanctions across the world.
	We will not rule out any other option that could at any stage stop the bloodshed, and we will not relent in our efforts to ensure the political transition, justice, accountability and security that the Syrian people need and deserve, and to support greater political and economic freedom in the middle east. This freedom is not only the legitimate right of all the peoples of the region, but the foundation of lasting peace, stability and prosperity.
	The time has long passed for the Assad regime to stop the killing and torturing of its people, and it is time now for all nations on the UN Security Council to insist on the cessation of violence and on the political process, which remain the only peaceful way to resolve this mounting crisis.

Douglas Alexander: I thank the Foreign Secretary for his statement and for advance sight of it. If anyone was in any doubt as to the seriousness of the situation in Syria, a simple examination of the facts should be enough to convince them of the scale of the horror that we are witnessing. The conflict has been raging for 15 months and the death toll is estimated at more than 15,000. As the Foreign Secretary told the House in the last few minutes, the village of al-Houla was the scene of one of the worst massacres of which there are reports. UN observers on the ground have confirmed that at least 108 people were killed, including 49 children and 34 women. I therefore join the Foreign Secretary in recognising the work of UN monitors who attempt to document such events. They have been repeatedly shot at and obstructed in trying to carry out that important task.
	This is not an historical conflict—it is unfolding in real time, documented on television screens and in YouTube footage. I therefore welcome this opportunity for the House to scrutinise the Government’s response. Fifteen months on, in recent weeks the conflict, instead of approaching its end, seems, if anything, to be entering a new and bloodier phase. We should be clear that the responsibility for the crisis lies primarily with the Assad regime, which continues to show utter contempt for the value of human life, perpetrating a violent and brutal crackdown on innocent people across Syria, for which it must ultimately be held to account. However, expressions of revulsion in response to the slaughter are not enough. Let us be candid and admit that the international community is dangerously divided on its response to the conflict. That division is drastically hampering the effort to stop the violence.
	The point of consensus for the time being is the Kofi Annan peace plan, but by any honest reckoning that UN-backed plan has so far failed to bring an end to the violence. Does the Foreign Secretary therefore think that increasing the number of monitors and boosting Mr Annan’s resources would improve the prospects of the plan succeeding? To date, the Annan plan has been judged to be the only option on the table, but the Foreign Secretary rightly told the House a few moments ago that the “Annan plan is not an open-ended commitment.” Will he tell the House specifically what the time limit and tests for the Annan plan are? How much slaughter is required before the international community acknowledges the plan’s failure and begins to formulate a more effective alternative means of ending the crisis?
	Further diplomacy is of course needed if the divisions in the international community are to be overcome, but the difficulty of the task must not detract from its urgency. What, therefore, is the Foreign Secretary’s assessment of the recent and fairly brutal judgment of Lord Ashdown, the former Liberal Democrat leader
	and former High Representative for Bosnia, who said of the British Government’s strategy for dealing with the crisis:
	“I don’t think that is wise diplomacy”?
	As the Annan plan is currently not working, the challenge is to ask what, beyond the Annan plan, can be done, even accounting for the divergence of views in the international community. Several steps short of military intervention should be considered to sharpen the choice facing the Syrian regime. First, on the financing of the regime, without a comprehensive oil embargo Syria can still export oil to countries outside the EU and United States. What discussions has the Foreign Secretary had with the Government of India, who do not have bilateral sanctions and who have allegedly been approached by the Syrians to purchase Syrian oil?The Syrian regime is also still able to import diesel from countries such as Venezuela, which allows it to sustain its military operation, including tanks, through foreign imports. What is the likelihood of a comprehensive oil ban being agreed by the United Nations? Failing that, what realistic pressure have the Government put on countries continuing to trade with Syria in such a way?
	Secondly, on the security situation and particularly on support for the opposition, there are steps that could alter the realities on the ground without breaching the arms embargo, such as blocking the communications of Assad’s forces and choking off his remaining finance from neighbours such as Lebanon, which we understand are still not enforcing the Arab League sanctions that they have previously agreed to.
	The Syrian military is one of the key pillars still sustaining the political regime in Damascus, and the newly appointed head of the Syrian National Council, Abdulbaset Sayda, was right to call for mass defections from the regime in one of his first statements since taking control of the SNC. What is the Foreign Secretary’s assessment of the current rate of such defections, and what steps can the international community to take to encourage and facilitate them further? Does he agree that more should be done to publish internationally the names of any officers ordering the current atrocities, as a clear signal of intent that they will face the full force of international justice for their crimes?
	The Foreign Secretary mentioned in passing that al-Qaeda is operating in Syria. What is the British Government’s view of the scale of its activity within Syria to date?
	I welcome wholeheartedly the Foreign Secretary’s recent visit to Russia. Does he believe that the Russian position is likely to shift significantly in the immediate future as the situation deteriorates further? I also welcome his comments about the friends of Syria group and the news that a further meeting of the group is being planned. He said that the Prime Minister intended to raise the issue of Syria at the G20 in Mexico. In the light of statements by a Chinese Minister earlier today that the situation in Syria should not be on the agenda at the G20 meeting, will the Foreign Secretary give us his assurance that he is taking all the necessary steps to ensure that appropriate time is found for a discussion that must take place at that meeting?
	The Foreign Secretary said in his statement that if the Annan plan was not implemented, the UK Government would argue for “a new and robust UN Security Council
	resolution aimed at compelling the regime to meet its commitments under the plan”. How will the British Government endeavour to shift Russia’s view to allow for agreement at the Security Council on the passing of such a resolution? That is surely the real test of whether there is a Security Council route beyond the Annan plan, about which the Foreign Secretary was more circumspect.
	The scale of the humanitarian crisis is growing by the day, as the Foreign Secretary acknowledged. This morning, The Times reported that a group called the Union of Free Syrian Doctors had questioned the international community’s commitment and said that help for doctors trying to get medical supplies in through Turkey had come only from a one-off donation by France and by private individuals. Will he use this opportunity to shed some light on that?

Mr Speaker: Order. I am listening intently to the shadow Foreign Secretary. He has provided much food for thought for the Secretary of State, who I am sure will be delighted to respond to each of his pertinent inquiries. I feel sure that those pertinent inquiries are coming very shortly to a close.

Douglas Alexander: Indeed, Mr Speaker.
	There is one final question that I should like to pose to the Foreign Secretary in the light of his remarks. What thought has been given to creating large humanitarian enclaves for civilians in neighbouring countries—safe areas in countries such as Turkey—given that the humanitarian crisis is as serious as he suggested?

William Hague: As the right hon. Gentleman said, the facts about the terrible atrocities that have been committed speak for themselves. He illustrated the fact that support for the work of the UN monitors and abhorrence of the crimes that have been committed are universal across all political parties and all shades of opinion in this country. He agreed, too, that the clear responsibility for the crisis lies with the Assad regime.
	The right hon. Gentleman asked about the Annan plan and the possibility of increasing the number of monitors. I have discussed that possibility with Kofi Annan several times. Certainly the United Kingdom would support an increase in the number of monitors if Kofi Annan were to ask for it. I will have a discussion with him again later today, and we will see what his latest assessment is. He points out, and we have to remember, that this is not a peacekeeping force. It was meant to monitor a ceasefire that had been agreed, so it is not a case of just increasing the size of a peacekeeping force. Of course, the monitors are going into very dangerous situations.
	The mandate from the existing UN resolution would expire on 20 July, which is pertinent to the right hon. Gentleman’s point about a deadline. I do not think it is wise to set an arbitrary deadline. If we said now that the Annan plan had so many days or weeks and found the day before that deadline expired that it was possible to hold an international conference to push the Annan plan, that would not necessarily be wise. Inevitably, the need to review the work of the monitors before 20 July will focus minds in the UN Security Council well before that on whether it is feasible or right to do so.
	The right hon. Gentleman asked about the comments by my noble Friend Lord Ashdown. From my memory of that article, I think his argument was that we should focus on other countries’ responsibility for addressing the situation rather than emphasising our own responsibility. I do not think he was criticising any of the diplomatic moves we have made. A more extended quotation might have been a good idea at that point in the right hon. Gentleman’s questions.
	On the question of discouraging oil purchases, of course we do that. We discourage all countries and I have taken the matter up with Foreign Ministers of many countries filling in for the EU sanctions on Syrian oil. The Syrians have found their particular type of heavy grade oil difficult to sell in other markets, so the income of the regime has been substantially reduced by the EU sanctions. In Istanbul last week, I also raised with Arab Ministers the enforcement of Arab League sanctions and the case for Arab nations adopting sanctions similar to those of the European Union.
	The right hon. Gentleman asked about defections, which take place from army units and seem to happen on a regular basis. The Assad regime tries to prevent high-level defections, not only by placing people under house arrest but by threatening the families of anyone who manages to defect from the regime. It makes it extremely difficult for them to do so. The right hon. Gentleman also asked about the names of army officers and those responsible for crimes, and of course some have been added to each list of EU sanctions. I will also consider his further point about whether more can be done to publicise those names.
	The right hon. Gentleman asked about the G20. The agenda of the formal meetings of the G20 will be for the Mexican presidency to finalise, but whether or not the subject is on the formal agenda there will be many bilateral meetings. It is possible for leaders to discuss whatever they wish, and the Prime Minister will therefore certainly be discussing Syria in and around the G20 meetings.
	Our dialogue with Russia on this subject is continuous, and I think it is fair to say that the Russian position has certainly shifted its emphasis and perhaps its substance to some degree, which increasingly emphasises that the Russians are not wedded to Assad and that they want to see stability in Syria. The most persuasive thing for them is not what any of us say but the fact that the situation is clearly deteriorating and that Syria is on the edge of the things we have described—collapse or full civil war. That is a terrible scenario for all the nations of the United Nations Security Council and for all who wish to see international peace and security. Russia can see that deterioration, too, and that is why they have made their proposals, to which we are unable to agree immediately for the reasons I have given, for an international conference. Russian diplomacy is being adjusted as the days go by, and my judgment is that it is worth continuing that dialogue with Russia and continuing to try to move them towards insistence that the regime implement the Annan plan.
	Finally, the right hon. Gentleman asked about large humanitarian enclaves. That would require the willingness of neighbouring countries, many of which are doing very good work in looking after the refugees on their soil—26,000 in Turkey, more than 22,000 in Jordan and 17,000 in Lebanon, which are large numbers in any
	case. People are taking refuge in those countries and we are helping to provide humanitarian assistance through international agencies. People are finding refuge in neighbouring countries, but issues such as safe areas or enclaves in Syria—that is perhaps not what he was suggesting—are a different matter. As I have said, we are not ruling out any option for the future but such safe areas would have to be truly safe and effective. Making them safe and effective raises all the issues about military intervention with which the House is familiar.

Peter Tapsell: May I suggest to my right hon. Friend that if any British joint military intervention is ever contemplated into the sectarian civil war in Syria—essentially a war between Alawites and Sunnis, each with foreign backers urging them on to greater ferocity—he will reflect on the British experience in Mandated Palestine, which demonstrated that the ultimate folly for an intruder into another country is to be caught between warring and irreconcilable historic forces?

William Hague: There are many points in history, including the one that my right hon. Friend points out, that show that we should always bring caution to any consideration of military intervention. That is why, despite all the frustrations and the terrible length of this bloody crisis, our efforts are so heavily devoted to, and we continue to work so hard on, the implementation of the Annan plan, and trying to bring Russia to a stronger insistence that the regime implement that plan. Clearly, that is because we think that is the only way to secure a peaceful transition in Syria and a peaceful solution to the crisis. It is impossible to know how, if the plan is not followed and implemented, the situation will develop. That is why I say that we should have all options on the table, but cautionary words about military intervention in such a complex situation are entirely well understood by the Government and the whole House.

Jack Straw: We all understand the necessary caution regarding going beyond the existing diplomatic measures, but notwithstanding what the Father of the House, the right hon. Member for Louth and Horncastle (Sir Peter Tapsell), said, that was the approach that we took to Bosnia for three years, with catastrophic results. Given the Foreign Secretary’s discussions with Sergei Lavrov and other Russian leaders, does he think that they comprehend the huge damage being done to their international reputation by the fact that it appears to the rest of the world that, whatever they are saying, in practice all they are doing is protecting an abject, brutal regime that has lost the consent of its people?

William Hague: That is a good point. I do not know what Russia’s private assessment is of that damage, but there is such damage, of course, and not only in the view of leaders in the Arab world, but among the huge populations who now watch the footage of these crimes on satellite TV. Of course, the same people across the whole middle east are familiar with, or were rapidly informed of, the fact that when we had a vote in the UN Human Rights Council 10 days ago, only three countries voted against that resolution: Russia, China and Cuba. That does not
	help any of those countries’ international standing in the region or, in the wider world, among people who have a passionate concern for human rights. That is one of the factors in their thinking. It may be one of the factors in the increased readiness to look for new solutions in order to bring about the implementation of the Annan plan. As I say, we will continue to work with Russia and try to persuade the Russian leaders on that basis.

Malcolm Rifkind: Over the weekend the Foreign Secretary made the important comparison between Syria today and Bosnia in the 1990s. Will he accept that we are repeating one of the major mistakes of that period by imposing an arms embargo equally on the Syrian regime and the Syrian insurgents, despite the fact that the regime has an overwhelming preponderance of military equipment already? Taking into account the fact that the embargo is not a Security Council embargo—it is one imposed purely by the European Union, and could therefore be changed and modified, regardless of the views of Russia or China—will my right hon. Friend have urgent talks with his fellow Foreign Ministers in other European Union countries on modifying the arms embargo to the degree required to enable appropriate military assistance to be given to Syrian insurgents, so that they can prevent, or at least seek to prevent, the continuing slaughter of the Syrian people?

William Hague: While not fundamentally disagreeing in all circumstances that might arise with my right hon. and learned Friend, I am not at the same point in the argument. As he well knows, there are serious disadvantages to sending arms to opposition groups, as well as the case that he might make. It is difficult to know in the current situation what those arms would be used for, and whether they could also be used to commit atrocities that we would find appalling. They could contribute to the cycle of violence that is building up and create a further reaction on the other side. We can see some of that now, as there clearly is an increased availability of arms, from whatever source, to opposition groups, and the cycle of violence is increasing. I think it is far preferable to any of the other options—options which may be on the table for the future, but it is far preferable now to put all our effort and to put our diplomatic effort entirely, even at this stage, into trying to secure the Annan plan, because that or something very similar to it is the only hope of a peaceful transition. Until all such efforts have been entirely exhausted, I think it is best to continue to aim for that peaceful solution and not to contribute in any way to the violence in Syria.

Peter Hain: We are all caught between horror at what is going on, and Britain’s and the west’s failure over Bosnia and not wishing to repeat that, but the only hope is to redouble the efforts that the Foreign Secretary has indicated he is pursuing with the Russian Government. Their strategic interests through their Mediterranean port in Syria and their other interests in Syria hold the key. Whether we like it or not, we are not going to achieve any progress by on the one hand encouraging the Russians to think that western intervention is yapping at their heels, and on the other hand thinking that just by berating them we are going to get any progress. The truth is that, whether we like it or not, we
	have to engage them and make them see that their own strategic interests will be advanced by resolving this problem, which probably only they can do.

William Hague: That is entirely the case that we are making. Of course we often make some criticism of their position, as they do of ours, in public but we have a good working relationship with the Russian leaders. I have discussed this many times and at great length, as the House can gather, with Sergei Lavrov and will no doubt do so again over the coming days. We will keep making exactly that case because, as we have been discussing over the past few minutes, all the alternatives to bringing about the full implementation of the Annan plan or something very close to it are extremely bloody and have unknowable consequences.

Menzies Campbell: I do not often disagree with my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind), but may I offer to the Foreign Secretary my belief that he should exercise considerable caution before embarking upon the notion of supplying arms, however well intentioned such a supply might be? There is a common characteristic, unfortunately, between Bosnia and Syria today—that is, the senseless brutality and unbridled barbarism. Is it not the case, and is this not something that he should impress not only upon Russia but upon China, that their apparent tolerance of that behaviour is seriously damaging to the very interests they seek to protect?

William Hague: In line with my earlier answer, I take my right hon. and learned Friend’s strong note of caution about supplying arms into such a conflict. It has not so far been our policy, in any of the nations affected by the Arab spring, in any of these conflicts, to supply arms to any of the parties involved. Even in Libya, where we were actively involved with the military intervention under a UN resolution, we did not supply arms to any of the participants, so to change that would be a major change in our approach. He is right about the long-term diplomatic cost and the cost in world opinion, not only to Russia but to China, and we certainly encourage other nations throughout the middle east and across the world to make that point very forcefully to their Russian and Chinese ambassadors.

Chris Bryant: I just wonder whether the carrot approach works very well with Russia. The United States of America tried to press the reset button and gained absolutely nothing, but the Russians gained a great deal of advantage. The Russians seem to be advancing an entirely cold war attitude to the situation, protecting their military interests in Tartus and saying that the biggest threat in their military doctrine is NATO. Is it not time we were a bit more robust with the Russians?

William Hague: The whole House has just been discussing how to persuade Russia to change its position. I do not think that it is a question of sticks and carrots, which is the wrong way to analyse this. In any case, the pressure on Russia in this regard is what will happen if there is no implementation of the Annan plan, which would be very destructive of Russian interests as well as the broader interests of international peace and security, so
	I think that doing our utmost to work with them and asking them to work with us to implement the Annan plan is the best way forward, and we will do that. As the hon. Gentleman may have gathered from my earlier comments, I do not shrink from criticising Russia, but it is also my job as Foreign Secretary to pursue this with Russia in a diplomatic way, which I will continue to do until the possibility of reaching success has been exhausted.

Richard Ottaway: On that point, the Foreign Secretary is right to continue his support for the Annan plan, but he must recognise that we are very close to having to acknowledge that it is not working and he is quite right to have all options on the table. May I press him a little on the international conference proposed by the Russians? In my view, it is well worth persevering with, but what would his attitude be if an invitation were extended to Iran? Would that deter him from attending, or would he be encouraged by that as something that might lead to a change on the ground of the sort he envisaged?

William Hague: No, I would not be encouraged by that. As I said in my statement, in any such international conference it would be important that all countries involved are ready to be part of the solution, which of course is a reference to Iran, in particular, which has been part of the problem so far. By sending equipment and technical advice to the Syrian regime—it might have helped in other ways that we are not familiar with—Iran has been assisting with the terrorising and subjugation of the people of Syria, which is not a very good starting point to come to an international conference designed to sort this out. We will see what can be agreed on this. The United States has objected very strongly to any notion of Iran being included in such a conference. I have said that Iran’s inclusion would probably make it unworkable, so it would be far simpler if we agreed that the conference did not include Iran.

Glenda Jackson: Several of my constituents have asked why the UN right to protection has not been exercised. Does the possible introduction of that right constitute one of the options to which the Foreign Secretary referred, and would the United Kingdom support its implementation, because with the best will in the world a peaceful solution to what is happening in Syria seems to be drifting further and further away?

William Hague: Of course, the best way to protect the people of Syria is to arrive at a peaceful solution and have a peaceful transition there. The hon. Lady asks why the United Nations has not done more on that. It is because there has been no unity at the UN Security Council. Twice—on 4 October and 4 February—Russia and China vetoed a UN Security Council resolution that would have applied greater pressure. We expect that if we tried at the moment to pass a resolution either sanctioning any kind of outside intervention in Syria or mandating sanctions from the entire world, it would run up against the same problem. The UN Security Council has therefore not yet mustered the unity to fulfil its responsibilities, despite our repeated efforts over more than a year, so at the moment it is not fulfilling its responsibilities to protect the people of Syria.

Edward Leigh: Any western intervention, such as arming the rebels, would make the disasters of Afghanistan and Iraq look like a picnic. The Alawites were a savagely persecuted minority until the French started empowering them; there are only 10 Alawites on the Syrian National Council, which numbers more than 300; and Christians are hugely unrepresented. Instead of constantly criticising the Russians, can we not appreciate that they have a sophisticated understanding of the country, and that we have to work with them to reach a peaceful solution which empowers the minorities?

William Hague: I hope that the Russians and all of us have a sophisticated understanding of the country, but that sophisticated understanding, when brought up to date, suggests that we are on the edge of a catastrophe for all those people unless we muster the international unity to ensure that the Annan plan, and the road map that arises from it, is put into practice.
	My hon. Friend is entirely right to worry about those things, and I have stressed in my meetings with opposition groups from Syria that not only must they come together but that they need the broadest possible representation of all groups in Syria and to increase the representation of Christians, Kurds and Alawites, working with, and in leading roles in, the opposition movement.

Ann Clwyd: On a day when Homs is yet again being pounded into the ground, it is very difficult to stand back and watch. I commend the Foreign Secretary for the considerable efforts that he has made so far, but how long can we wait? What does the UN doctrine on the responsibility to protect actually mean in practice? At the moment it does not seem to mean very much; it seems to be a menu form which people pick and mix as they choose. But they are all signed up to it, and once again this calls into question the composition of the UN Security Council. My preferred option is safe havens: it worked for the Kurds; it can work for the Syrians. I realise that it also requires some kind of military intervention, but putting that in place is absolutely essential.

William Hague: It is sadly true that nations have signed up to commitments and to principles under United Nations charters at various stages, but it is then very difficult to achieve international unity on putting them into practice. Of course, there are so many nations that signed the universal declaration on human rights—long before the doctrine on the responsibility to protect—whose human rights records the right hon. Lady and I would be severely critical of, so a signature to a declaration is never the same as putting it into practice when a crisis comes. I accept that she is in favour of the safe havens idea, and although I think that there are the constraints I mentioned earlier, I also stress that, given the nature of the situation and the fact that we do not how it will develop over the coming months, unless we can get a peaceful transition going in Syria we are not taking that option off the table, either.

Julian Lewis: To what extent do the Government believe that the possession in Syria of major Russian technical intelligence-gathering facilities is a factor in Russia’s determination not to see President Assad fall from power?

William Hague: Russia has a range of defence and, one has to assume, intelligence interests in Syria, and they will all be factors in Russia’s alliance with the Assad regime and in the way Russia has acted over the past year to protect the regime. It is hard to rank those things, but they will all be factors. However, Russia’s important interests in Syria should also now be factors in Russia using all possible leverage to bring about a peaceful transition in Syria, rather than a continuation of the current situation, which could bring about the collapse of the country and, indeed, a very clear danger to all those same Russian interests.

Mark Durkan: Is the Foreign Secretary worried that a failure to agree on an international conference in, for example, the context of the Mexico meetings could be used as a top-up for the diplomatic “excusory” that we have already had from Russia? In the event of a failure to agree on such a conference, what quick, visible and credible alternative does he envisage?

William Hague: Of course it is possible that if we cannot agree the terms of an international conference, some commentators or other nations will say, “Well done; we tried, but we weren’t able to go forward that way.” However, it is important for us to try to ensure that such an international conference would actually achieve something. Also, we do not want an international conference that simply allows the regime to play for time. It is therefore necessary for us to negotiate on the terms of such a conference, even though that means that there is some risk of its not being able to take place. If we do not succeed in bringing about such a conference, then our recourse will be to the United Nations Security Council. I mentioned in my statement that we are already working on elements of a draft resolution that would greatly strengthen the previous resolutions. That would return us to the same problem of winning Russian and Chinese co-operation, but it would return the matter to that forum.

Neil Carmichael: I certainly welcome the Foreign Secretary’s robust approach in connection with arms sales to Syria, notably from Russia, but what assessment has he made and can he give to the House on the likelihood of a change of mood from the Russian Government?

William Hague: As I mentioned, there have been changes of emphasis—one can call them changes of language—from Russia over the past couple of weeks. Russia does support the Annan plan, and Russia voted for UN resolutions 2042 and 2043, so we are agreed on the desirability of the Annan plan. What we are talking about is the insistence on its implementation, which I argue to Moscow, as have others, puts a particular responsibility on Russia because of its links with the Assad regime and the leverage that it has over it. As I indicated earlier, there have been some changes. I think there is increased anxiety in Russia about the situation, and I will be discussing this further with the Russians during the course of this week.

Jeremy Corbyn: Obviously we all condemn the human rights abuses, wherever they are occurring, all over Syria. Will the Foreign Secretary
	be more specific about which opposition groups the UK Government are supporting either financially or with logistical equipment or training, and about whether there are any British arms or British special forces in the area, which can only exacerbate what is already a very serious set of divisions within the opposition in Syria?

William Hague: The groups outside Syria that we are supporting—the kind of groups that I have been meeting in Istanbul—include the Syrian National Council, which is the largest of these groups, although some of the minority ethnic communities are not yet affiliated to it, and we want them to come together. All our support is non-lethal. Our assistance takes the form that I described in my statement—communications equipment, training, and human rights monitoring. No armed intervention is being practised or sanctioned by the United Kingdom at the moment.

Duncan Hames: After meeting Chancellor Merkel recently, Russia’s President Putin sought to claim impartiality, reportedly saying, “We are not for Assad and neither for his opponents.” If this were really so, does the Foreign Secretary consider that future Russian support for a Security Council resolution referring the situation in Syria to the International Criminal Court could help to deter future atrocities in that country?

William Hague: Certainly that is something that we have wanted to get going, and we have succeeded in doing so in the UN Human Rights Council resolution, which refers to the International Criminal Court. Such are the atrocities and the appalling nature of these crimes that if we could muster the votes to take that through the Security Council itself, we would do so. I hope that at some stage in the future we will be able to do so, and that we will be able to take the Russian leaders at their word on this, but what they have said recently about not being committed to Assad himself or to the Assad regime has not yet translated into a readiness to support such resolutions.

Caroline Lucas: I welcome the Secretary of State’s strong urging of the Russians to halt their arms sales to the Syrian regime, but does he agree that we ourselves should cease to have any dealings with the foreign arms companies that are providing weapons to the Syrian Government, such as the Russian state-owned company Rosoboronexport? If so, will he use his influence to help to prevent that company from fulfilling its plans to take part in a trade exhibition that will be part of the Farnborough air show next month in the UK?

William Hague: I will certainly look at the point that the hon. Lady has raised and discuss it with my colleagues at the Ministry of Defence. I am not sure that we can do much in our relations with that company that would make a difference to this situation, but I will look at her point.

Robert Buckland: Does my right hon. Friend share my concern that the time that could be spent in negotiating the terms of reference for an international conference is time that the international community can ill afford to waste, bearing in mind the
	continuing loss of life? Does he agree that Russia would be better advised enthusiastically to support the enforcement of the objectives of the Annan plan?

William Hague: Yes, I very much agree with that. In the absence of the implementation of the Annan plan, the absence of a sufficiently strong insistence on its implementation and the absence of the implementation of all the UN resolutions that we have promoted, the virtue of a conference is that it could be the forum in which insistence on the Annan plan or something like it is made by Russia as well as by all the other countries that would be involved. Every day and every week that has gone by has contributed to the huge death toll of perhaps 15,000 people. Every day that goes by adds to that death toll. We are pursuing this option in the absence of the other options, which have so far not worked.

Andrew Love: I welcome the Foreign Secretary’s confidence in the Syrian opposition groups, with the £1.5 million of funding, but let me press him a little on his previous answers. What steps has he taken to reassure himself that those groups are willing to work alongside each other to find a solution in Syria? What reassurance does he have that they are representative of communities in Syria and, perhaps most importantly, that they are supportive of the terms of the Annan plan? Would achieving all those things not be the best way to get Russia involved?

William Hague: I can give the hon. Gentleman a fair degree of confidence about those things. Certainly in what they say, the groups are committed to a Syria with respect for minorities and with democracy, as I said in my statement. They are supportive of a peaceful solution. It is difficult, however, to assess how representative they would be in a free election in Syria, since there has been no such election. I hope we will discover that in the future.
	The groups are not sufficiently united. I have spoken to them clearly and bluntly about the need to be united. When any country faces an existential crisis, the people who believe in its freedom and territorial integrity should stand together, as we have always done in this country. Syria is certainly in an existential crisis, so I have put that point to the groups strongly. They need to remedy that without delay.

David Rutley: Given the scale of the atrocities, will my right hon. Friend tell the House what steps are being taken to ensure that all relevant intelligence is being shared between the parties and nations that are opposed to the Assad regime to enable the best possible international response should the situation escalate in the days and weeks ahead?

William Hague: We are in close touch on a daily basis with all our key partners and allies on this matter, including the United States, leading European nations and leading Arab nations. That is why I went back to Istanbul last Wednesday to meet Secretary Clinton and the Foreign Ministers of 13 other nations from the region and from Europe, including the Foreign Ministers of France, Germany and Italy. We share information all the time. What I have said to the House today could have been said, and probably is being said, by the great majority of
	those Ministers in their Parliaments, because we have a common understanding of the situation and of the way forward, which I have described.

Michael Ellis: The Assad regime is a brutal, wicked and barbaric dictatorship that is savagely oppressing its people. May I take this opportunity to applaud the Secretary of State and his Department for the work he is doing on the international stage to assist the Syrian people? I appreciate that the Foreign Office has, over several months, repeatedly warned any UK citizens who might still be in Syria to leave that country, but I understand that there may be some UK citizens still there—in particular, those who may have dual nationality. If that is the case, are there any contingency plans for any British citizens who might still be in Syria?

William Hague: My hon. Friend is right: it is many months now since we warned all British nationals to leave Syria. We have made that clear for a long time, and I reiterated it when we ceased to be able to operate an embassy safely. We have what is called a protecting power arrangement—that is, an arrangement with another country that looks after our interests, which in this case is Hungary, as it still operates an embassy there. We are grateful to the Hungarians for that assistance. They are able to give assistance, if appropriate and possible, to British nationals. However, I repeat that British nationals should not be in that situation. They should have left Syria long ago, and if there are any remaining, they should leave now.

Family Migration

Theresa May: With permission, Mr Speaker, I would like to make a statement on family migration.
	The Government are committed to reviewing all the main routes for immigration to the UK as part of our programme to reform the immigration system. As a result, we anticipate that net migration will fall from the hundreds of thousands to the tens of thousands. We have already announced major changes to the immigration rules by introducing a cap on work visas and reforming student visas to cut out widespread abuse. We now turn to reform of the family route.
	In 2010, family immigration accounted for approximately 18% of all non-EU immigration to the UK—around 54,000 people out of 300,000. However, like the rest of the immigration system, family immigration has not been regulated effectively for many years. Sham marriages have been widespread, people have been allowed to settle in Britain without being able to speak English, and there have not been rules in place to stop migrants becoming a burden on the taxpayer. We are changing all that. The UK needs a system for family migration that is underpinned by three simple principles: first, that those who come here should do so on the basis of a genuine relationship; secondly, that migrants should be able to pay their way; and thirdly, that they are able to integrate into British society. If people do not meet those requirements, they should not be allowed to come here.
	In July last year, the Government published a consultation on precisely how such a family migration system can be developed. Today I am setting out the new measures that we are introducing, and will shortly lay before Parliament the necessary changes to the immigration rules, to come into effect on 9 July. I shall place in the Library copies of the detailed statement of intent, together with a summary of the responses to the consultation. When I lay the changes to the rules, I will also publish the impact assessments of the new measures.
	For too long we have had an immigration system that could be easily exploited by sham relationships. We are stepping up our enforcement activity, but it is important that policy reflects the seriousness of the problem as well. We will therefore increase the minimum probationary period for new spouses and partners from two years to five years. We will also publish new guidance to help caseworkers identify sham marriages.
	For too long we have had an immigration system that did not take into account whether people coming here could pay their way. The Government’s reforms will mean that anyone who wishes to bring a foreign spouse or partner, or dependants to Britain will have to be able to support them financially. They must not become a burden on the taxpayer. Following advice from the Migration Advisory Committee, we will set a minimum income threshold of £18,600 for sponsoring a partner to settle in the UK. This is the level at which a sponsor can generally support themselves and a partner without accessing income-related benefits. Children involve additional costs for the state. To reflect this, there will be a higher threshold for each child sponsored: a £22,400 threshold for a partner with one child, with an additional £2,400 for each further child.
	It has also been too easy for elderly dependent relatives to join their migrant children here and then potentially become a burden on the taxpayer. Therefore, if someone wants to sponsor a dependent relative to come to Britain who requires personal care, they will have to show, first, that they cannot organise care in the relative’s home country and, secondly, that they can look after the relative without recourse to public funds. We will also limit to close family the people who are able to access that route: parents, grandparents, sons, daughters, brothers and sisters. Aunts and uncles will no longer be eligible to come here through the family route. Future applications will also have to be made from overseas, not while the applicant is here as a visitor.
	For too long, people have been allowed to settle in Britain without being able to speak English well enough and without having a proper appreciation of our values. So, from October 2013, all those who wish to live here will need to demonstrate that they are able to participate fully in British life. All applicants for settlement will need to pass the “Life in the UK” test and, because a person cannot integrate if they cannot communicate, we are strengthening the language requirement by introducing a separate English language test at intermediate level.
	The family migration system will work best if it is able to operate efficiently. That means simplifying processes and removing unnecessary waste. The cost of administering appeals against family visit visa refusals is around £29 million a year. No other category of visit visa attracts a full right of appeal. So the Crime and Courts Bill will remove the full right of appeal for family visitors, bringing the process in line with the rest of the immigration system. In the meantime, we will lay new regulations to restrict the full appeal right to those applying to visit a close family member who has settled, refugee or humanitarian protection status in the UK.
	In developing all the measures that I have outlined, the Government have had article 8 of the European convention on human rights—the right to respect for private and family life—very much in mind. But, as the convention itself makes clear, article 8 is not an absolute right. The convention allows the state to interfere in the exercise of article 8 rights when it is in the public interest to do so, and when the interference is proportionate to the public interest being pursued. In an immigration context, it allows necessary and proportionate interference on public safety grounds, or to protect the UK’s economic well-being.
	Article 8 is clearly a qualified right, but Parliament has never set out how it should be qualified in practice. So, for too long, the courts have been left to decide cases under article 8 without the view of Parliament, and to develop public policy through case law. It is time to fill the vacuum and put the law back on the side of the British public, so we are changing the immigration rules to establish that if someone is a serious criminal, and if they have not behaved according to the standards that we expect in this country, claiming a right to a family life will not get in the way of their deportation.
	If a foreign criminal has received a custodial sentence of 12 months or more, deportation will normally be proportionate. Even if a criminal has received a shorter sentence, deportation will still normally be proportionate if their offending has caused serious harm or if they are a persistent offender who shows particular disregard for
	the law. For the most serious foreign criminals—those sentenced to four or more years in prison—article 8 rights will prevent deportation only in the most exceptional of circumstances.
	I will shortly ask the House to approve a motion recognising the qualified nature of article 8 and agreeing that the new immigration rules should form the basis of whether someone can come to or stay in this country on the basis of their family life. For the first time, the courts will have a clear framework within which to operate, and one that is on the side of the public, not foreign criminals. I commend this statement to the House.

Yvette Cooper: I thank the Home Secretary for giving us early sight of her statement on family migration, article 8 and foreign criminals. I thank her for giving us early sight of it in The Sunday Times and on “The Andrew Marr Show” as well.
	I shall respond first to the Home Secretary’s points about article 8. Foreign citizens who come to Britain should abide by our rules. The Government should be able to deport people who break the law and, as she will know, the number of foreign criminals being deported trebled in the last five years of the Labour Government. However, there continue to be cases in which it is difficult to understand why the courts have allowed the foreign criminals involved to stay in Britain. We therefore agree with the Home Secretary that action is needed.
	Article 8 of the European convention on human rights is a qualified right, and the right to respect for family life should be balanced against other issues, including public safety, economic well-being and preventing disorder or crime. Parliament is therefore entitled to set out how those rights should be balanced against those considerations when dealing with foreign criminals, and to provide a framework within which the courts should operate. We should discuss those details, but the way in which Parliament provides that framework must be legally effective.
	I am puzzled by the Home Secretary’s decision to use a motion in Parliament that will obviously not change the law or override case law in the way that primary legislation would. Surely that approach will risk creating confusion and legal uncertainty. Would it not be better for her to do this properly, through primary legislation, instead? If that were to happen, we would happily hold discussions with the Government to work on getting that right.
	On the measures on family migration, when people travel and trade across borders more than they ever did before, there needs to be a fair framework for those who fall in love and build family relationships across borders, too. We agree that stronger safeguards are needed for the taxpayer on family migration. If people want to make this country their home, they should contribute and not be a burden on public funds, but it is not clear that the best way to protect the taxpayer is to focus solely on the sponsor’s salary. For example, in the current economic climate, someone on £40,000 today could lose their job next month, and then, of course, there is no way to protect the taxpayer. The system does not take account of the foreign partner’s income, which might have a differential impact on women. Will the Home Secretary explain why the Government ruled out
	consulting on a bond that could have been used to protect the taxpayer if someone needed public funds later on?
	There is also a wider problem about the gap between the Government’s rhetoric and reality. The Home Secretary admitted yesterday that these changes to the family visa will not mean “big numbers”, yet she said again today that she anticipates meeting her net migration target of tens of thousands, even though the latest figures show net migration still at around 250,000. Will she tell us when she expects to meet that target? Does she still think it will be met by the end of this Parliament, in line with the Prime Minister’s promise—“No ifs. No buts.”—that it would be met or are she and the Prime Minister making promises that they have no intention of keeping?
	There is also a gap between rhetoric and reality on deporting foreign criminals. The number of foreign criminals deported increased every year until the election, but since then it has fallen, year on year. It fell by 18% in the last financial year alone, as nearly 1,000 fewer foreign criminals were deported in 2011-12 compared with the previous year. According to Home Office briefings to the newspapers, the Home Secretary’s measures on article 8 will apply to 185 foreign criminals. Even if every single one of those article 8 cases had been deported, the Government would still have deported hundreds fewer foreign criminals last year compared with the year before, and we would still have more foreign criminals in the community instead.
	The truth is that this announcement does not deal with the growing problem under the Home Secretary’s Government. Too many foreign criminals are staying in Britain—not because of article 8, but, in the words of a borders inspector, because of
	“difficulty in obtaining travel documentation”
	resulting from the Border Agency’s weaknesses in enforcement and administration. This is another example of problems that have got worse for the Border Agency in the last two years.
	We will work with the Home Secretary to get the detail right and on some of the sensible points she has made, but statements and parliamentary motions are not enough; she also needs to take action on the practical problems that have got worse on her watch.

Theresa May: I thank the shadow Home Secretary for supporting the action the Government are taking in some areas, and I hope she will be able to carry that support through when the motion comes before Parliament, because a strong voice from this Parliament on article 8 and the rules on family migration will be all the more effective in relation to the courts.
	The right hon. Lady asked why we have chosen to work through a motion in Parliament and immigration rules. We will change the immigration rules, and this Parliament will have an opportunity to make its voice heard and to give its clear view on where it feels the framework should sit in respect of article 8. I have every expectation that that will have an impact on how article 8 is interpreted in the courts.
	The right hon. Lady asked why we had gone down the route of the income threshold. We asked the independent Migration Advisory Committee to advise us on what we
	should do and on what income level we should adopt. It gave us a range of income levels from £18,600 up to a higher point, and we chose to adopt the lower point, adding in elements for individual children, rather than go down a route that would be available only to those people who had capital and were able to put up a bond in the first place.
	Changes in the numbers were also raised. The right hon. Lady was right to refer to the net migration figure shown in the last published set of statistics from the Office for National Statistics, which includes migration numbers up to September 2011. What she may have failed to look at, however, are the figures for student visas thereafter, as we have seen a significant decrease in the number allocated through to March 2012. [Interruption.] The shadow Immigration Minister, the hon. Member for Rhondda (Chris Bryant), says “That is good”, as though getting rid of abuse in the student visa system were not good. I am not surprised, because for too many years Labour allowed too many people to come to this country claiming to be students when they were not students. We are getting on with dealing with that.
	The right hon. Lady talked about the need to deal with deportation. We are increasing the enforcement action that is being taken. All Governments have experienced problems in regard to the acceptance of an individual as being from the country concerned and the granting of the recognised travel documents on that basis, but the right hon. Lady’s claim that this Government are somehow failing in relation to immigration sits ill with the record of her Government over too many years. Her Government failed to control immigration; this Government are controlling immigration. Her Government failed to end the abuse of student visas; this Government are ending the abuse of student visas. Her Government failed to deal with article 8; this Government are dealing with article 8.

Several hon. Members: rose —

Nigel Evans: Order. I remind the House that in order to ask a question about the statement, a Member must have been in the Chamber to listen to it.

Mark Reckless: I welcome the series of impressive and, dare I say, Conservative measures that the Home Secretary has announced. Given that thresholds are higher when children are involved, is there not a risk that people entering the country in order to marry will quickly have a number of children, and may therefore need state support although they are above the original threshold?

Theresa May: I understand my hon. Friend’s point, but I think that it would be highly unreasonable for the Government to tell people that they could enter the country but could not have any children. When people first enter the country, they will be able to stay for a limited period, and will then have to undergo a renewal process to establish whether they meet the requirements at all stages before they achieve settlement.

Jack Straw: While, like my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), I do not recognise the
	parody of the last Administration’s immigration policy, I none the less welcome the decision about guidance on article 8. Young Amy Houston, aged nine, was killed in my constituency by a hit-and-run failed asylum seeker who subsequently invented a family life. Despite the very best efforts of the Home Office, my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) and me to pursue appeals, the appeal decisions were, I believe, incomprehensible to most people, and that family have been left bereft.
	May I ask the Home Secretary two consequential questions? First, if it transpires that the changes in the immigration rules and the resolution in the House do not work as intended, will she introduce primary legislation? Secondly, will she look at the current practice whereby the courts keep their judgments confidential in cases such as that of Mohammed Ibrahim? It was very difficult even for me, as Justice Secretary and the bereaved father’s Member of Parliament, to get hold of the judgment of that immigration court. Whatever the arguments may be for confidentiality on asylum applications, there can, or should, be no confidentiality in cases such as this.

Theresa May: The right hon. Gentleman has made an extremely important point. As he will have noticed, the current Justice Secretary is in the Chamber and will have heard what he has said. I am sure that we can consider the right hon. Gentleman’s point about the confidentiality of judgments.
	The right hon. Gentleman referred to the terrible case involving the actions of Mohammed Ibrahim. Obviously, Paul Houston has been campaigning for changes for some time, and we expect the changes that we are introducing to deal with such cases. The House of Lords in 2007, and the Court of Appeal in more recent cases last year and this year, have made clear the need for a statement from Parliament about where the public interest lies. The right hon. Gentleman is right, and I am grateful for his support.

John Redwood: I urge the Home Secretary to take the advice that if, peradventure, a motion is not sufficient, this House will be very happy to legislate to deal with the foreign prisoner problem, and will she also explore with the Justice Secretary whether there are more foreign criminals in our jails who could serve their term elsewhere, and not at our expense?

Theresa May: I thank my right hon. Friend for those questions, and they serve to remind me that I did not answer the point made by the right hon. Member for Blackburn (Mr Straw) about the next steps we might take if what we are doing does not lead to a change in the sorts of decisions coming from the courts. If that is the case, we will, indeed, look at further measures, and they could, of course, include primary legislation. I can assure my right hon. Friend that both the Justice Secretary and I have an interest in trying to ensure that as many foreign national prisoners as possible are removed from this country, including being removed to serve their sentence elsewhere.

Keith Vaz: I support what the Government are doing on article 8, which is in keeping with the Select Committee’s recommendations on the
	removal of foreign national prisoners, but I profoundly disagree with the Home Secretary’s proposals on spousal visas. The effect of that change will be directed against the British Asian community—not against illegal immigrants, but against settled Britons who are here, pay their taxes and contribute to this country. I do not believe that the British Home Secretary should be determining who the spouse of a British citizen should be based on an arbitrary limit—on an arbitrary financial limit. I urge the Secretary of State to look again at these proposals. She should look at the limits and see how this would affect a city like Leicester.

Theresa May: What I think is absolutely right is that the British Government should say that if somebody is bringing somebody in here to be their spouse or partner, they should be able to support that individual and the family life they are going to have. That is important, and that is what the Government are saying. The right hon. Gentleman talks about the income threshold being arbitrary, but it is not arbitrary. The Migration Advisory Committee looked at various levels of income and this was the level it said was the point at which people could generally support themselves without having to be reliant on income-related benefits. It suggested a higher level to us as well, but we chose this level. I think it is right that people should be able to support the individual they are bringing in to be their partner or spouse.

Lorraine Fullbrook: I welcome the fact that an English language requirement has been introduced for foreign spouses coming to the UK. What further measures will be put in place to ensure that those coming here legally can be properly integrated into our communities?

Theresa May: My hon. Friend raises an important point. This is not just about numbers; it is also about ensuring that people are able to integrate and participate fully in British society, and speaking the English language is an important part of that. That is why from next year we will raise the required level to intermediate level. We will also require people to take the “Life in the UK” test, to ensure that they have an understanding of life here in the UK, because we want the people who come here to be able to participate fully in British life, and to contribute fully to it, as I am sure they want to do.

Frank Field: I welcome the Home Secretary’s statement, as I have also welcomed her earlier, allied statements on this theme. The polls show that voters of all parties are concerned that our population is growing primarily because of immigration. When all her policies are in place, what impact will they have on that projected growth?

Theresa May: As I have made clear on several occasions, we are putting in place a number of policies that we anticipate will lead to reducing net migration to the tens of thousands. I have never been somebody who says I expect the population of the UK to be a certain figure by a certain period of time, but I think it is right that, by taking these actions, the Government will be reducing net migration, and that will have an impact on the matter the right hon. Gentleman raises.

Michael Ellis: I commend the Home Secretary on this move. Does she agree that some of the judgments by judges hearing cases relevant to this issue have, frankly, been embarrassing and infuriating? Judges must be encouraged to consider the public interest first and foremost. If they are not inclined to consider the public interest first, with this House having passed a motion on the matter, primary legislation must be given a high priority.

Theresa May: As I indicated in a previous response, on a number of occasions the judiciary has, in effect, said to Parliament, “You need to set out what is the public interest and where the balance of public interest lies.” That is why I expect that what we are doing in the immigration rules and the debate in Parliament will help judges in saying, “This is where Parliament believes the balance should be between the public interest and the individual’s rights.”

Pete Wishart: What discussions did the Secretary of State have with the Scottish Government about the proposals? Why was she not open to the suggestion of variance in the minimum income threshold, to match the variance of income across the United Kingdom? We in Scotland do not share her little conservative view of immigration; we prefer to do things a bit differently. Does she not think it is now time that we had our own powers over immigration, so that we can match our community needs in Scotland?

Theresa May: A regional variation in the income threshold was looked at by the Migration Advisory Committee and rejected by that committee for a number of reasons. The committee looked at income versus public sector costs in regions and the purely practical point that if we had regional variation, the result could very well be someone initially going to live in a region where the threshold was lower, in order to get into the country, and then moving within the country.

Tom Brake: The coalition Government must be firm but fair on immigration, so I welcome the income threshold that was eventually agreed. What flexibility or discretion will be available for those who, for example, might not be able to pass the intermediate language test—perhaps for medical reasons—or who, for exceptional reasons, might have to apply for family reunion while they are in the UK?

Theresa May: Obviously we are conscious that some people will find it difficult to deal with the income threshold—perhaps a sponsor here who is disabled and may not have the same expectations of income as others—so there will be some ability to be flexible on that. The English language test is an important part of the scheme we are putting in place. I acknowledge what my right hon. Friend says about people who, for a medical reason, may have difficulty with that, but overall I think it is right that we have the test in the scheme.

Stephen Timms: I was contacted by a constituent this morning. He is engaged and he earns £16,000 a year. He says:
	“I have never relied on the state…I would like to live a happy life with my wife in my country of birth, why should the amount I earn be a reason not…to”?
	How does the Secretary of State answer my constituent?

Theresa May: I say to the right hon. Gentleman what I have said previously. When someone wants to bring a partner or spouse to the UK, it is right that we have an expectation that they will be able to do so without relying on benefits. The income threshold set by the Migration Advisory Committee is the level at which people are generally able to support themselves and a dependant, which is the circumstance that pertains when someone brings in a spouse or partner. The figure has not been plucked out of the air by this Government. The Migration Advisory Committee looked at it very carefully and this is the threshold that it proposed.

Paul Uppal: Some years ago, a prominent immigration lawyer told me that the two main drivers of immigration are, first, the perception—right or wrong—that we have an overtly generous welfare system in the UK; and secondly, lax human rights legislation. Does my right hon. Friend agree that in this statement and through our welfare reforms, we are tackling those issues head-on?
	The shadow Home Secretary talked about a bond. Does my right hon. Friend not find that ironic and perhaps politically opportunistic, given that, when in power, Labour considered such a measure but chose to put it to one side, but in opposition they sing a different tune?

Theresa May: My hon. Friend makes an important point, and he is absolutely right: when people look at which country to move to, there are issues to do with their perception of the laxity or otherwise of the regimes operating in that country. What we are doing today on the immigration rules and article 8, our measures on all the other aspects of immigration, and the welfare reform we are putting through, will have an impact.
	As for the bond, not only is it ironic that that is something that the previous Government looked at, but of course it would make it even harder for the people to whom the Chairman of the Home Affairs Committee and the right hon. Member for East Ham (Stephen Timms) referred.

Glenda Jackson: It is not unusual for individuals to have been brought to this country as small children by their parents from former British colonies and then to have lived for 40, 50 or, as in one instance in my constituency, 60 years in this country under the misapprehension that they had automatic British citizenship. If one of these individuals—someone who has lived all their life in this country, been educated here, created a family here and, as in many instances, created businesses here—commits a crime and has to serve a prison term, should they be deemed to be foreign and therefore be deported?

Theresa May: I made clear in my statement the thresholds that we believe should pertain in this instance, and that only in exceptional circumstances should somebody who is committed to prison for four years or more, having committed a crime, be able to claim family
	rights here in the UK and that deportation is normally proportionate for those who have been imprisoned for 12 months or more. I say to the hon. Lady about the individuals concerned: I am sorry but if they do not want to risk the possibility of being deported as a foreign national offender, they should not commit a crime in the first place.

Helen Grant: These proposals will help to tackle the scourge of the sham marriage. What other action is my right hon. Friend taking to address such issues?

Theresa May: Sham marriage is a problem and it is right that we should look at it. We are examining some further steps that could be taken to deal with it, such as combining some of the powers of the UK Border Agency and the registrars to ensure that they have greater ability to deal with what they consider to be sham marriages, should they appear. We have also stepped up our enforcement activity. As a member of the Church of England, I am sad to have to say that, as my hon. Friend may have seen, there have been cases where Church of England vicars have been undertaking sham marriages. I think that is appalling, but we have been identifying those cases and taking action.

Jeremy Corbyn: May I ask the Home Secretary to think again about the answers she gave to my right hon. Friends the Members for East Ham (Stephen Timms) and for Leicester East (Keith Vaz) on spousal visas and family reunion? When she carries out this impact assessment, will she examine the impact on communities and on families on modest incomes, who have every right to be together as a family? In her impact assessment, will she also give some credibility to the enormous contribution made to the economic success of this country by 60 years of migration to our society and the great benefits given to us? Could she not say something positive about the role of immigrants in our society, rather than always repeating what the Daily Mail says?

Theresa May: If the hon. Gentleman were to look back at the speeches and comments I have made on immigration over the past two years, he would see that I frequently say that immigration has been a positive benefit to this country. But what I think is not good for this country is uncontrolled immigration. That is why this Government are bringing some control into our immigration system. We made it clear two years ago that we would look at every aspect of immigration, and we have done so. We continue to look at issues associated with immigration, and it is absolutely right that we set out clearly what we believe are the parameters within which it is right for someone to be able to bring a spouse or partner here to the UK.

Chris Heaton-Harris: I congratulate the Secretary of State on making one of the most important announcements of this Session in this House today. It is so important that I am here to ask a question about it instead of watching England against France. [Interruption.] I am doing my bit. There is a distinct lack of public confidence in our immigration system. Is not the best way to tackle that by introducing these sorts of measures, which strengthen public confidence as a result of strong, robust immigration measures?

Theresa May: I thank my hon. Friend for his commitment to this issue, such that he is in the Chamber now. [Interruption.] I have noticed that there have been one or two leavers since the statement started, which may have something to do with what is happening in Ukraine. He is absolutely right to say that the issue of confidence is important, and I think that members of the public will be pleased to see that the Government have taken yet another step to bring some control into our immigration system.

Joan Ruddock: Among the two categories of people who come to me most frequently in my constituency are parents seeking to bring often teenage children to this country because the grandparents who are looking after them in Africa have either died or become unwell. Will the right hon. Lady say what the impact of these new measures will be on that kind of family reunion? Am I right in thinking that she has said that very elderly people who may not have had the opportunity to learn English but are dependants of people in this country will have to pass the new intermediate English test?

Theresa May: In relation to the right hon. Lady’s first point, we have made it clear that there is an income threshold for people who want to bring a spouse, a partner or a child to the UK. On her second point, which was on dependent relatives, we are tightening up the system, but making it clear that it may be possible to bring in an elderly dependant who requires a degree of care that is not available to them in the country in which they live. In such circumstances, it must be shown that they will not be a burden on the state and that the personal care can be provided by the family.

Julian Lewis: What will be the effect of the package on asylum seekers who come without their spouse or children? In particular, some asylum seekers fail to get asylum but cannot, for one reason or another, be sent back. There are also genuine asylum seekers to whom we are happy to grant asylum. Will they be able to bring their families to join them?

Theresa May: Asylum seekers will have the same rights to apply to be here in the UK as they have currently. The package is for those who want to bring non-EU people as spousal partners; it does not affect people who are here genuinely as asylum seekers and who have been given the protection of this country.

Fiona Mactaggart: Before the election, the Home Secretary said compellingly that she wanted to be part of a family-friendly Government, but the proposals put a means test on family life for many people and mean that some parents cannot be in the same country as their children or their spouse. She will be aware that, currently, if a spouse applies for a visit visa, they are automatically refused, because it is said that they should be able to get a settlement visa. She is ending the appeal against the refusal of visit visas, but will she change the arrangements so that, for example, fathers can at least come and be at their children’s graduation ceremonies as a visitor when families cannot afford to settle here together?

Theresa May: The hon. Lady refers to ending family visit visa appeals. It is right that we do that. It is the only immigration route that has a full appeal. It will be quicker for people to put in a separate application for a decision rather than appeal. All too often, appeals cases are lost because further evidence is brought forward when it might have led to a different decision had it been available in the first place.

Duncan Hames: Young newlyweds in Britain are often supported financially by their parents. Would it not therefore be appropriate to allow the parents of sponsors to demonstrate such financial commitment by contributing to meeting any income thresholds applied under the new rules?

Theresa May: I understand the hon. Gentleman’s point. We are giving some allowance within the rules—with qualifications—for individuals’ savings, but we do not think that it is appropriate to include money that somebody just says they can give to the sponsor. The measures are about the sponsor showing that they can support the spousal partner and/or children that they are bringing into the UK.

Nia Griffith: Many in my constituency working in both the public and the private sector bring up a family on less than the proposed threshold. What equality impact assessment has the Secretary of State carried out on whether the threshold will have a disproportionate effect on groups such as younger people, British women who want to bring in a foreign husband, or those living in less prosperous regions?

Theresa May: The hon. Lady echoes an earlier question about impact assessments. As I said, all the impact assessments will be published when the immigration rules are laid.

Nick de Bois: The Home Secretary’s proposals are very welcome, and my constituents will welcome them. Can she confirm whether the English language test will be held under test conditions, and whether identities will be checked, to avoid cases such as those in which people have had other people take tests for them?

Theresa May: We are conscious of the problems that have existed in relation to some tests in the past, which is why we have already tightened up the rules. We will continue to examine the tests to ensure that they genuinely assess whether an individual—and the right individual—fulfils the language requirements that the Government set out.

Alison Seabeck: The right hon. Lady may be aware that my constituency has a strong military presence, including overseas servicemen and women. We have a significant number of Fijians serving in the Royal Navy and Royal Marines, for example. What discussions did she have with the Ministry of Defence about the ability of those servicemen, who often sign up for more than 10 years at a time and are obviously on lower incomes, to bring their families here and keep them here?

Theresa May: We have indeed discussed the issue with the Ministry of Defence, and the current rules will continue for the time being for both serving UK personnel and foreign and Commonwealth personnel. We are considering how we can revise what are called the part 7 rules, which relate to foreign and Commonwealth personnel serving in Her Majesty’s forces, and in the coming months we will consider very carefully what arrangement should apply in future. At the moment, transitional arrangements mean that the current situation will pertain for those personnel.

Edward Leigh: I warmly commend the Home Secretary for her statement today. It shows that we can come up with good, strong, Conservative statements and be popular with the British people. Our Liberal friends, take note.
	May I say to the Home Secretary that the reality must match the rhetoric? We gave a solemn promise at the last general election that we would get immigration down to tens of thousands, and there has been far too little progress. Will she recommit herself today to appointing officials of sufficient quality and in sufficient numbers to achieve that aim? Otherwise, there will be a huge democratic deficit.

Theresa May: The figure of tens of thousands continues to be the aim that we are working towards. My hon. Friend is right that, as I indicated in response to the shadow Home Secretary, the figures to September 2011 have still not shown a fall. If he looks at the subsequent student visa figures through to March 2012, however, he will see a significant fall in allocations. That should have an impact on net migration figures in due course.
	My hon. Friend tempts me down a route that I will not go down, but I make fairly and squarely a point that I should have made in response to an hon. Friend earlier: these proposals have been put forward by the coalition Government.

Jonathan Ashworth: I entirely reinforce the point that my parliamentary neighbour, my right hon. Friend the Member for Leicester East (Keith Vaz), put to the Home Secretary. Even if the threshold has been suggested by the Migration Advisory Committee, surely she must recognise that it is entirely arbitrary and that many people in Leicester and other parts of the country are on earnings of nowhere near £18,000. Does she not recognise that many families who settle in cities such as Leicester make a huge contribution to the economy? What economic modelling has she done of the wider economic implications of these restrictions?

Theresa May: A question that starts off by referring to the fact that the figure has been produced by the Migration Advisory Committee cannot, in the same breath, say that it is “entirely arbitrary”. It is not arbitrary. The committee considered very carefully the level at which people can normally support themselves and not depend on income-related benefits, and that is the figure we selected.

Andrew Bridgen: From the Brighton conference reforms to the changes announced today, does my right hon. Friend agree that
	this Government have done more to address the legal misuse of human rights legislation in the past 13 weeks than the previous Government did in 13 years?

Theresa May: I can give my hon. Friend a very simple and easy answer to his question, and that is yes.

Kate Green: What discussions has the Home Secretary had with her colleague the children’s Minister, the Minister of State, Department for Education, the hon. Member for Brent Central (Sarah Teather), about the implications of the announcement on the best interests of children? Will the Home Secretary assure me that when she publishes the draft regulations and the Government’s impact assessment there will be a full analysis of the implications for compliance with the UN convention on the rights of the child?

Theresa May: We have considered that aspect of the proposals’ impact and I can assure the hon. Lady that every relevant Department was involved in considering these issues, including the Department that contains the children’s Minister.

Stewart Jackson: I welcome my right hon. Friend’s announcement and believe that her proposals bear comparison with the robust policies pursued by the Labour party in Australia. She will know that notable human rights lawyers such as Geoffrey Robertson QC have already said that in the absence of primary legislation, an indicative motion in this House would not fetter the discretion of or bind the European Court of Human Rights. Is it not therefore right that we should still keep open the option of reviewing our membership of that body, with a possible option of doing what Sweden did and temporarily suspending our membership?

Theresa May: I am aware that there are those who have indicated that they think that the courts will not pay the attention that I expect them to pay to the framework set
	out by Parliament. We are talking about the decisions that the UK courts will take. On some aspects of the immigration rules—my hon. Friend might not like my saying this—the European Court has taken a tougher view than the courts in the UK. Our intention is that the courts in the UK should now have a clear framework so that they know when and how to operate and how to balance the public interest with individual rights under article 8.

Mel Stride: Does my right hon. Friend agree that it would be beneficial if, as a result of her statement, we sent a clear message to the judiciary that the right to a family life is a qualified right that must be qualified in the public interest?

Theresa May: I entirely agree with my hon. Friend. The European convention is absolutely clear that the right to a family life is a qualified right. What we are doing today and will do in due course when Parliament has its debate—and, I trust, supports the motion the Government will propose—is saying very clearly to the judiciary, “Here is the framework and the balance you should be striking between the public interest and that of the individual.”

Neil Carmichael: I warmly welcome the statement. On the question of sham marriages, is it not conceivable that a forced marriage could fall into that category? What measures does the Home Secretary have to deal with that and what are her thoughts on that subject?

Theresa May: As a Government, we are very concerned about forced marriages. We have decided to take the step of criminalising forced marriage, which we believe will send a clear message to people that it is wrong. It is right that the Government send that clear message because forced marriage is wrong, it leads to abuse and we should ensure that it does not take place.

Point of Order

Caroline Flint: On a point of order, Mr Deputy Speaker. Today, workers protested against the possible closure of Coryton oil refinery, which would result in more than 850 job losses and cost the local economy nearly £100 million. We understand that a deal to keep Coryton open as a fully functioning refinery could still be possible with the provision of state aid, as has happened in France. With just days left until Coryton ceases to function as a refinery, have you had any indication from Ministers at the Department of Energy and Climate Change that they plan to come to the House to make a statement on the steps they plan to take to secure the future of the refinery?

Nigel Evans: I have received absolutely no indication at all that any Minister intends to come to the House today to make a statement. I am sure that if that is the case, the House will be informed in the usual manner.

Enterprise and Regulatory Reform Bill

Second Reading

Nigel Evans: The amendment on the Order Paper has been selected.

Vincent Cable: I beg to move, That the Bill be now read a Second time.
	I recognise that we face serious competition this afternoon, but let me begin by putting the Bill in the wider economic context. Our economic strategy has two key elements, one of which is to maintain a credible fiscal policy. That policy has led to this country’s borrowing costs dipping to record lows in recent weeks. If we were without a believable deficit reduction strategy, we would have been forced to adopt one by market panic. Although fiscal credibility is necessary, it is not sufficient. A lasting recovery has to be built on the back of sustainable sources of demand and, above all, exports and stronger business investment. We are seeking to bring that about in extremely difficult international conditions, though some encouragement can be derived from the fact that 630,000 private sector jobs have been created in the past two years—almost twice the number lost in the public sector.
	We also need to deal with the persistent imbalances that the previous Government did so little to address. Gross financial imbalances, a bloated banking sector and property speculation are not a basis for a sustainable recovery. A reliance on domestic demand and the neglect of exports has meant that we have been left behind in international markets. Legislation cannot, of itself, remedy those problems and generate economic activity, but the Enterprise and Regulatory Reform Bill is an important building block none the less. This far-reaching package of measures will scrap the unnecessary bureaucracy that is holding back companies, overhaul the competition framework, and boost business and consumer confidence.

Jonathan Edwards: Will the Secretary of State give the House categorical assurances that this House and the other House will not use the Bill to include the recommendations of the Beecroft review, with specific reference to sack-on-the-spot?

Vincent Cable: I can give a categorical assurance. Of course, as the report has now been published, the hon. Gentleman may be aware that it contains a number of proposals, many of which are admirable, sensible, and being implemented, but on the particular proposal that he mentions, we will most definitely not be proceeding in the way that he outlines.

Joan Walley: I am concerned that the Secretary of State could bring forward proposals in the Beecroft report that would make this an even more scrappy Bill. Does he think it important that his Department looks to bring about growth in the context of the green economy? I do not see the background for that in this scrappy Bill that he is bringing to the House of Commons tonight.

Vincent Cable: We do see that as part of our mandate; indeed, it is the first item that I will discuss in detail. Specifically to support enterprise, we propose legislating for a green investment bank—that, I think, is the issue that is of concern to the hon. Lady. We propose improving the employment tribunal system and promoting resolution of disputes—that, I think, deals with the first intervention. We propose giving shareholders of UK quoted companies binding votes on directors’ pay; promoting competition through a single competition and markets authority; strengthening powers to address anti-competitive behaviour; and encouraging innovation and investment in design by enabling copyright owners to prevent the importation of replica products.
	To simplify regulation and strip away unnecessary red tape, we propose extending the primary authority scheme to more businesses, for one-stop advice; repealing unnecessary regulatory requirements on business; and providing greater powers to time-limit new regulations—that is, to apply sunset clauses to new measures.

John Whittingdale: Does the Secretary of State accept that copyright is the legal expression of intellectual property rights, and is not a regulation? Is he aware of the widespread concern among the creative industries about clause 56, which will allow copyright to be amended by statutory instrument without full parliamentary debate? Will he assure the House that the Government will not change copyright in that way without proper parliamentary scrutiny?

Vincent Cable: Yes, I can give assurances on that. We will deal with this subject later, but I totally accept the hon. Gentleman’s crucial point: intellectual property rights are a key part of a market economy. They are not “regulation” in the pejorative sense in which we normally refer to it—absolutely not; but we have to strike a balance between access to information and copyright protection. We think we are striking the right balance, and we are proceeding to implement the Hargreaves report, which has many of those ideas at its heart. On a personal level, I introduced the private Member’s Bill that strengthened criminal penalties for copyright theft, so I have a long-standing interest in upholding that legislation.
	Let me deal with the first issue I mentioned—the green investment bank. The transition to a low-carbon economy is a very big challenge. Some analysis suggests that there will be demand for more than £200 billion of investment in the next decade to develop the innovative technologies and products that will underpin it. The challenge is all the greater, given the novelty of these markets and the long-term nature of returns on green infrastructure investment, which may deter private sector investors. There is a market failure here that the green investment bank will address. The bank will break new ground in the financing of projects, while demonstrating to the market that such investments can deliver commercial returns.

Luciana Berger: rose—

John Healey: rose—

Vincent Cable: Let me finish, and then I will take interventions.
	The bank will also demonstrate the Government’s lasting commitment to important green objectives. For these reasons, I am sure the Opposition will welcome and support its objectives, as I am sure the hon. Lady will.

Luciana Berger: The Secretary of State may be aware that a number of months ago the Deputy Prime Minister committed money from the green investment bank to capitalise the initial run of loans for the green deal, which is supposed to launch in a few months, yet we heard at the end of last week that a number of companies, including British Gas and Kingfisher, are halting their plans to proceed with the non-profit-making green deal finance company because the money that they are expecting from Government has not been forthcoming. Will the Secretary of State say when they should expect those funds to come forward?

Vincent Cable: I am aware that the team currently working on this, UK Green Investments, has been looking at the green deal proposal. Of course it must be commercially viable, as well as environmentally sound, and I cannot give the hon. Lady a precise answer as to when the team will have completed its analysis. I think a good deal more information is still required.

John Healey: Will the Business Secretary confirm that the green investment bank will be able to raise funds from the capital markets? In other words, will it be a bank that is able to borrow? If not, it cannot be described as a bank, and it is really just a fund.

Vincent Cable: It has been described as a bank by the Financial Services Authority, which is the relevant regulatory body, and it will be able to borrow after 2015 in capital markets, subject to the overall debt position of the Government at that time. It is a bank.

Joan Walley: Is it not the case, though, that without the certainty that it will be possible for the bank to borrow on the open market, the first few years of the green investment bank will be uncertain? We will not know definitely that it will be able to borrow when the time comes.

Vincent Cable: The bank will have the certainty of knowing that it has £3 billion committed to it from the Government and it is in the process of developing the projects to utilise that efficiently. I shall point out to the House some of the steps that have been taken to provide that concrete certainty about which the hon. Lady asks.
	We have formed the bank as a public company, called the UK Green Investment Bank plc. It will be headquartered in Edinburgh. I have appointed Lord Smith of Kelvin as the chair and Sir Adrian Montague as the deputy chair. The bank will be funded with £3 billion to 2015, and the first £200 million of that has already been allocated by UK Green Investments. It will have borrowing powers from 2015, subject to a quite proper test of improving public finances. The Bill specifically provides for complementing this work by ensuring that the bank must have a statement of objectives clause in its articles of association.
	The Bill also embeds the bank’s independence, which is crucial for its success. To achieve this, the Bill requires me as Secretary of State to lay an undertaking before
	Parliament not to interfere with the bank’s operational independence or commercial activities as a condition of designation. I provided this undertaking to the bank on its incorporation. This will ensure that the bank operates on commercial terms, funding these nascent and important environmental markets.

Eilidh Whiteford: I welcome the establishment of the green investment bank in Edinburgh. What measures are the Government putting in place to ensure that small and medium-sized businesses can benefit from the green investment bank? Will there be a procurement code, as requested by the Federation of Small Businesses?

Vincent Cable: I do not think a specific procurement code is required for this institution, though of course Government procurement raises wider questions. If the hon. Lady looks at the first tranche of commitments—the £200 million—she will find that that is for a fund dealing with a substantial number of waste projects, which have small-scale enterprises as part of their supply chain. That is the way that SMEs will benefit.

Simon Hughes: Will the Secretary of State confirm that not only are the Government committed to the green investment bank, which is a very good thing and has long been called for, but that there is a wider strategy in his Department, the Department of Energy and Climate Change and the Department for Communities and Local Government to make sure that we develop the green economy, producing a significant number of extra manufacturing jobs and apprenticeships and growth, and that that is a very significant part of the Government’s policy as a whole? It is not just about a bank and £3 billion being lent over a certain number of years.

Vincent Cable: My right hon. Friend is right. We have the Green Economy Council, which is an over-arching body representing the key Departments in the Government to make sure that our work in this area is integrated and properly joined up.

John Healey: If the referendum on Scottish separation is successful, will the Secretary of State relocate this green investment bank from Edinburgh back to England? May I recommend that he considers Leeds and re-examines the case for locating the bank in Yorkshire?

Vincent Cable: I have every confidence in the sense of the Scottish people, and I have every confidence that the bank’s headquarters will remain viable and expanding in Edinburgh.
	On employment law, the Government are acutely aware of the need to do all they can to support business expansion and job creation. That is why the Bill contains provisions to reform the employment tribunal system and encourage dispute resolution through conciliation. Smaller businesses have consistently told us that the fear of ending up in a tribunal is high up their worry list and is a real disincentive to taking on staff. I have made it absolutely clear that I have no truck with the idea of a free-for-all hire-and-fire culture, and responsible British businesses do not want to go there either.

David Evennett: I congratulate my right hon. Friend on his introductory comments on this important Bill. Government Members strongly believe in business, and we do not want to hold it back. On the other hand, we want regulation that is necessary to protect the work force, and we want to help them. We need a change in the law to help businesses grow and flourish.

Vincent Cable: My hon. Friend makes the point in a fair and balanced way, and he defines exactly what we are trying to achieve.

Richard Fuller: I am grateful to my right hon. Friend for saying that he will have no truck with compensated no-fault dismissal, but with many businesses, through the Institute of Directors and the Federation of Small Businesses, making the case for compensated no-fault dismissal, what representations has he had on that? Why has he been so strenuous in saying that he will have no truck with it?

Vincent Cable: I am happy to go back and look at the correspondence, but the Federation of Small Businesses, as well as the Engineering Employers Federation, made it absolutely clear that they did not think that was a sensible approach for business.

Julie Hilling: When the Secretary of State says that a great number of people have made representations about employment regulation curtailing business growth, does he agree that it is only 6% of employers who stated that employment regulation is an issue that concerns them?

Vincent Cable: I think the hon. Lady is referring to a survey of small business that my Department did. Indeed, roughly that order of businesses ranked that as their top priority, as opposed to market demand and bank lending. Even though it may not be at the top of everybody’s concerns, for many small companies there is a legitimate fear, as my hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett) pointed, about the tribunal system and the way it functions.

Several hon. Members: rose —

Vincent Cable: I will take one more intervention, then I will move on.

Geraint Davies: Does the Secretary of State agree that the Beecroft proposals about no-fault dismissal amount to a charter for intimidation and harassment, including sexual harassment? A boss could say to an employee, “Will you sleep with me?”, and if she said no, she could find herself sacked.

Vincent Cable: That is going rather further than I would want to go with the argument or the evidence.

Kate Green: The Bill does not contain measures on some of the matters on which the Government are consulting in respect of employment law, following the red tape challenge. Does the Secretary of State intend to bring forward more proposals during the passage of the Bill—in relation,
	for example, to employer liability for third-party harassment, to the ability of an employment tribunal to make a decision that will then apply to all staff, or to the statutory questionnaire?

Vincent Cable: I have no such proposals. There is nothing stopping the hon. Lady proposing amendments for us to consider.

David Ruffley: In 2004 Germany exempted micro-businesses from unfair dismissal-style protections. Has the Secretary of State looked at the German experience and noted, as I have, that youth unemployment there has halved, from just over 12% to just over 6%, in the seven years since the changes were made?

Vincent Cable: As it happens, I was in Germany a few weeks ago—I unfortunately had to miss Business, Innovation and Skills questions—and one of the points clearly made by the various employers I met was that their procedure is far more cumbersome than ours, even for small companies. Indeed, small companies are required to adopt the two-tier system, a works consultation, which is very cumbersome indeed. There is no evidence that the German model, although admirable in many ways—I wish we had many of its aspects here—in any way helps to deal with this problem.

Brian Binley: I had hoped to see in the Bill further measures taken from the German book, particularly the exclusion of micro-businesses from many of the regulations that hamper them right at the start of their life. Is the Secretary of State willing to consider that and perhaps accept an amendment to that effect in Committee or on Report?

Vincent Cable: We will obviously look at any proposals on their merits, but our current regulatory system does have a micro-business exemption and we test all our proposals against that possibility. My hon. Friend should perhaps look at the FSB’s submission, because one of the problems the small business sector often highlights is that it does not wish to be regarded as a second-rate tier of employment that is colonised by cowboy employers. It makes it very clear that it is small businesses that resist the segmentation of the labour market.

Sam Gyimah: Does the Secretary of State agree that the current employment tribunal system is not simple, transparent or inexpensive for employers, because for many of them dealing with an individual case or a class action-type case is incredibly expensive and long-winded, and that serves as a barrier to businesses hiring new staff? They know that if things go wrong it is very complicated, so simplifying the system and enabling them to deal with it without resorting to disputes should be the way forward in the Bill.

Vincent Cable: I totally agree with my hon. Friend, who anticipates many of the things I will say. He is absolutely right that the process is very cumbersome and time-consuming. There is currently an enormous backlog of 430,000 cases and it is very costly, particularly for small companies. The whole thrust of the changes I want to introduce relates specifically to making the tribunal system much simpler and avoidable where possible.

John Healey: May I say how welcome the Secretary of State’s balanced view is, in contrast to those of some Members behind and beside him? On the question of changing the tribunal system, what increase in resources will he make available to the Advisory, Conciliation and Arbitration Service if everyone who wants to put a claim to a tribunal must first put it to ACAS?

Vincent Cable: My experience is that colleagues behind and beside me have a very balanced view of this question—we have no difficulties in this area at all. We will indeed rely heavily on ACAS and it is important that it is properly resourced, so we will obviously have to look at that, but we have had no warnings that it cannot handle the processes that we propose to introduce. If the right hon. Gentleman will let me, I will try to describe what those are.
	Our reforms are not about removing individual employment rights; they are designed to ensure that the tribunal system is fair to all parties and supports labour market flexibility. They are meant to improve the prospect of employers and workers sorting out problems through reconciliation—ACAS-based dispute resolution—rather than the adversarial and costly method of going to court, as my hon. Friend the Member for East Surrey (Mr Gyimah) admirably pointed out. Tribunals are a costly and stressful process for everyone involved. Giving all parties a new opportunity to resolve disputes through ACAS will maximise the chances of resolving a problem without going to a tribunal.
	We want to do more to encourage parties to reach an agreed solution at an earlier stage. We will therefore introduce an additional clause in Committee to ensure that the offer of a settlement cannot be used against an employer in an unfair dismissal case. That will facilitate the use of settlement agreements, making it easier and quicker for employers and employees to come to an agreed settlement where an employment relationship is not working.

Julian Smith: I welcome the decision to move forward with settlements and compensation, which is a really good move, particularly for small businesses, and thank the Secretary of State for listening to many Government Members who have put the case for more clarity for smaller businesses.

Vincent Cable: I thank my hon. Friend for his positive response. The Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for North Norfolk (Norman Lamb), who will guide the Bill through Committee, will be able to develop that a little more, and any insights that my hon. Friend has for improving that new idea will be warmly received.

Chuka Umunna: Of course, if an employee and an employer have “without prejudice” discussions that involve an offer to pay off and for the employee to depart on that basis, at present that cannot be adduced at tribunal. The Secretary of State will know that a relationship of trust and confidence is essential to the existence of an employment relationship. How does he see that working if an employer’s offer to pay off has been refused by the employee who feels that there is no reason why they should leave?

Vincent Cable: If the dispute is then unresolved, which is the implication of the last phrase in the hon. Gentleman’s question, it would of course remain and would have to be resolved either through conciliation or, ultimately, a tribunal, so he is referring to an unresolved dispute rather than a resolved dispute. What we are specifically proposing is that, if there is an agreement and the dispute is resolved, the matter cannot subsequently be raised in a tribunal case—[ Interruption. ] He shrugs his shoulders, but our understanding, having talked with business groups and trade unions, is that that would be a very helpful step, and I think that that reinforces what we have just heard.
	In addition, we are streamlining the tribunal process itself, including providing for the introduction of a rapid resolution scheme, so that straightforward cases can be dealt with more quickly, and reducing the burden of resolution for users of the tribunal system and the taxpayer.

Helen Grant: Does the Secretary of State agree that the rapid resolution scheme will make it quicker, cheaper, easier and less stressful to deal with those straightforward matters not only for employers, but for employees?

Vincent Cable: Yes, and I thank my hon. Friend for making that important point. It is not simply employers who have problems with the existing system; often payments are far less than the people who bring the cases expect, the process is stressful and lengthy and the current system simply cannot handle the volume of claims.
	In addition, there will be a discretionary power for employment tribunals to levy a financial penalty against an employer where there has been an aggravating breach of an individual’s employment rights, which will also encourage employer compliance. Taken together, these measures will help shift the emphasis from confrontation to conciliation when resolving workplace disputes and give businesses the confidence to expand and take on new staff.

Steven Baker: On the point about business confidence and taking on new staff, having worked as a freelance software engineer, one thing I see missing from part 2 is anything to resolve the difficulties and ambiguities with the status of freelancers. Will the Secretary of State use the opportunity in Committee to do something about IR35?

Vincent Cable: I am tempted to engage in a long disquisition on that subject, having been involved in the debates on IR35 10 years ago. It is primarily a tax issue. As some Opposition Members will remember, the IR35 measures were introduced primarily to avoid a particular form of tax avoidance using national insurance, so if we have to do more on IR35 we will look to my colleagues in the Treasury, rather than this Bill.
	Let me turn to directors’ pay. Fairness is important, and never more so than when the fiscal situation we inherited has forced upon us difficult decisions that affect everybody in society. That principle extends to executive pay, which for some years has behaved in a way that is unrelated to the rest of the economy or performance.
	There is a well-established case for the regulation of directors’ remuneration, given the inherent conflict of interest when directors set their own pay. Moreover, shareholders in a number of companies have shown that they are increasingly angered by soaring pay for top executives that is unrelated to company performance. Their willingness to challenge rewards for failure is admirable, but I want this “shareholder spring” to be more than just a passing, seasonal phenomenon.
	In developing our proposals, we have worked intensively with businesses and investors to create a workable package that helps shareholders to hold directors to account, while avoiding unnecessary red tape on business and unrealistic demands for investors to micro-manage pay. Responses to our consultation showed clear support for strengthened shareholder voting rights in order to improve the link between pay and long-term performance, while still allowing boards the flexibility to devise and deliver pay policy.
	In the past it has been too easy for companies to ignore a significant adverse vote from their shareholders. That is why the Bill includes a provision to give shareholders binding votes on directors’ pay. We intend to introduce new clauses in Committee, when we have analysed in detail the responses to our consultation and finalised our proposals in that area.

Jonathan Edwards: What consideration has the Secretary of State given to creating remuneration bodies that include company employees? Surely such bodies would have a wider remit and far greater buy-in.

Vincent Cable: That is an issue on which we have frequently exchanged views across the House, and we do indeed want to see employee consultation, but we are not mandating employee representatives on boards, which I know some people have called for, and we have made that very clear in the past.

Simon Hughes: This is one of those issues that the Government inherited. It is the scandal, left by the previous Government, of absolutely obscene pay for top executives—uncontrolled by shareholders. I therefore welcome the proposals, but will my right hon. Friend clarify that the Prime Minister and Government still take the view that in the public sector the ratio should be a maximum of 20:1, and that in the private sector, where it is not a matter for government to determine, all shareholders will have adequate notice of any proposals, so that there is both private and public participation in the debate as well as a binding vote on the remuneration package for the executives at the top of private sector companies?

Vincent Cable: There are separate developments taking place that do not require primary legislation, and they will improve the quality of information available to shareholders. The Financial Reporting Council has responsibility for that, and I do not have the powers to direct it, even if I wanted to, but the quality of information is intended to improve, and we certainly want to see a range of information made available, including the aggregates that my right hon. Friend describes, as well as simpler and clearer information. That process is taking place in parallel with this Bill.
	The Bill will improve the way in which competition is promoted and policed. The UK’s support for a free and open trading system remains fundamental to our economic strategy, and the steady pressure from competitive markets ensures that businesses boost productivity and consumers benefit. Our competition regime has been well regarded, but it can be too slow, and recently there have been some worrying criticisms about how it has managed cartel offences.
	The reforms that I propose are designed to improve the effectiveness and efficiency of competition enforcement, operating through a new competition and markets authority, backed by streamlined and strengthened powers. The current division of responsibility for the two phases of the markets and mergers regimes, between the Competition Commission and the Office of Fair Trading, can lead to a duplication of activity and the inefficient use of resources. Further, the time it currently takes to complete mergers, markets and anti-trust cases is often far too long, and that in turn imposes additional costs on business, including on those that pose no threat to competition.
	Our reforms to the competition regime are designed to create a single, strong voice for competition and a one-stop shop for business; to create greater certainty for business, thanks to faster, clearer and, indeed, statutory time frames; to provide for more effective action to tackle anti-competitive mergers, including the discretion to suspend them; and to provide for robust action to tackle cartels, which can damage business and consumers alike, by removing, for example, the need to prove dishonesty. In addition, it will be easier for businesses to ask the new competition and markets authority to halt uncompetitive practices while investigations are ongoing. These measures go hand in hand with proposals, on which we are currently consulting, to allow businesses to take private actions to stop anti-competitive practices and to achieve redress.
	Another aspect of our reforms relates to intellectual property rights, an issue that the Chair of the Culture, Media and Sport Committee, the hon. Member for Maldon (Mr Whittingdale), raised a few moments ago. The modernisation of copyright is critical to investment in the UK’s creative industries, one of our most successful export sectors. Research by Imperial college and the Intellectual Property Office shows that annual copyright investment in artistic originals in film, TV and radio, books, music and art was about $5 billion, twice the original estimate. Spending on UK design amounts to almost £33.5 billion, and there are about 350,000 people in core design occupations of all kinds.
	The sale of unauthorised replicas of classic designs, such as a lamp or a piece of furniture, means that firms that depend on design can lose out, so the Bill ensures that those designs that are also artistic works and, therefore, qualify for copyright protection will be protected for 70 years from the creator’s death, instead of for the current 25 years.
	The Bill also creates an order-making power that will allow the Government to make any future changes related to copyright exceptions or exceptions to rights in performances. The practical consequence of that will be to maintain the level of criminal penalties, in which as I said earlier I have a personal interest, given that my private Member’s Bill introduced the current maximum penalty level of 10 years’ imprisonment
	In addition, the Government have made a number of proposals in response to the Hargreaves review of intellectual property and growth and subsequent consultation. They are needed to ensure that the copyright system is fit for purpose in the digital age. It has been decades since the intellectual property regime was overhauled, during which time the world has changed beyond recognition. It would be negligent to leave unchanged a system suited to the cassette recorder in an era of iPads and cloud-based music services.
	Primary legislation will be required for three of those reforms: the introduction of a scheme to allow extended collective licensing; one to allow the use of orphan works; and, finally, a back-stop power to allow the Government to require a collecting society to implement a statutory code of conduct, should it fail to introduce or adhere to a suitable voluntary code.
	The Government’s proposals on extended collective licensing and on the use of orphan works are designed to make it simpler for users to use copyright works legitimately, while protecting the interests of rights holders. At the same time, introducing codes of conduct for collecting societies will provide valuable reassurance to the thousands of small businesses and other organisations, including creators, that deal with them.
	The Government are finalising their response to the consultation on those three proposals, and if we decide to proceed we will want to move swiftly. The Bill presents an opportunity to do so, and I shall announce a decision on the matter as soon as possible.

Geraint Davies: How does the strength of law on copyright compare with that on patents? I am thinking of the international duplication of a copyright, such as on a chair, as the Secretary of State said, and how the law will be enforced internationally.

Vincent Cable: I do not think that there is any link between patents and copyrights in this case; they are separate systems of law. The hon. Gentleman will know that in the European Union there is already a unified approach to patents and to copyright, but we are trying to ensure that in the UK context copyright protection is properly enforced. That is the purpose of the changes before us.

John Whittingdale: The Secretary of State will be aware that in the Hargreaves report a number of the proposals relating to possible extensions of copyright exception are causing real concern in the creative industries. Can he provide an assurance that they will be introduced not by statutory instrument, but in proper, primary legislation?

Vincent Cable: I am not going to give the hon. Gentleman a very precise answer because I will need to check on the exact legal position. I am aware of the concerns, and he is one of several people who have expressed them. I will endeavour to reply to him in writing to give him the precise answer to his question.
	A further set of reforms accelerates the Government’s drive to tear up unnecessary red tape. We inherited over 20,000 separate rules and regulations affecting business in the UK. Cumulatively, this regulation stifles growth and strangles innovation, and in the past two years we have launched a concerted drive to tackle the problem. We introduced the one in, one out rule to stem the flow
	of regulation to business. The aim of one in, one out is not only to force regulating Departments to deregulate more but to change the Whitehall culture to encourage Departments to use regulation only as a last resort. Under the red tape challenge, 20 regulatory themes have been launched for comment on the website, involving more than 3,700 regulations. Decisions have been announced by Ministers on 1,500 of those, of which well over 50% will be scrapped or improved.

Kate Green: How will the provisions of clause 51 on repealing some of the provisions of the Equality Act 2010 in relation to the general duty and the good relations duty have any impact on business whatsoever?

Vincent Cable: I was going to mention that measure at the end of my speech. We see it essentially as a bit of legislative tidying up; we are not going to argue that it has significant impacts on business. However, we can pursue the detailed implications.
	The Bill introduces further measures and makes it possible to include a sunset or review clause in any new secondary legislation to ensure that legislation is fit for purpose and is regularly reviewed. It also extends business eligibility for the highly successful primary authority scheme, which allows firms to get assured advice from one local authority on a particular regulatory issue. Often what businesses find most bewildering is not the regulation itself—they recognise that rules are often necessary—but the inconsistent application of the rules so that they have to adjust their systems depending on the whim of a local official. The primary authority scheme deals with that.

Sam Gyimah: On reviewing regulations that have already been passed, one regulation that springs to mind is the agency workers directive, where, on issues such as pay, bonuses and holidays, we have gold-plated what Brussels originally introduced. In so doing, we have made what is supposed to be flexible, temporary work more like permanent work, which it should not be. Would we be able to review that legislation under the sunset clause that the Secretary of State mentioned?

Vincent Cable: This would not be the context in which to do it, because it is, of course, now part of the law. We have looked at this in considerable detail because a lot of concern has been expressed about it. The UK’s implementation of the agency workers directive came about as the result of a negotiated agreement between employers and employees and their representative bodies. We explored the possibility of easing some of the burdens on business arising from the directive and came to the conclusion that in practice we could not do so. However, I hear the hon. Gentleman’s concerns, which were expressed by many companies.

Sam Gyimah: I understand that the TUC and the CBI, as European social partners, were very involved in the negotiations between employees and business, but representatives of small businesses were not, despite the fact that the impact of such legislation on small businesses can be particularly draconian. I urge the Secretary of
	State to consider a way of reviewing the gold-plating of such legislation, especially where it applies to small businesses.

Vincent Cable: I have an open mind if the hon. Gentleman has good ideas as to how that can be done. We have committed ourselves to removing the gold-plating of European legislation as it applies to Britain, and if he has good, constructive ideas, we are happy to look at them.

Julian Smith: Has the Secretary of State given any further thought to including EU directives and legislation in the quarterly statements that are being produced by his Department? Earlier, he said in answer to a question of mine that he might consider it, and I would be interested to know whether he has done so.

Vincent Cable: The Minister of State, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who has done admirable work in progressing this agenda, tells me that we are indeed planning to do that and that it will appear in that form.

Sheila Gilmore: Following the dialogue that has just taken place, I am left unclear whether the Secretary of State agrees that agency worker regulations are gold-plated. If he thinks that they are gold-plated, in what sense is that the case, and if he does not think so, will he make that statement clearly?

Vincent Cable: As I said, that case has been strongly made to us by people in the business community. I also said that the directive’s current form in British law was the result of a consensus among the main social partners. Although the CBI has small business membership, it would not consider that area to be its primary function. If there are specific proposals on how some of the gold-plating, if that is what it is, can be alleviated in a sensible and fair way, I am always willing to look at that. I do not have a closed mind on these issues.

Sheila Gilmore: I am still left unclear about the meaning of gold-plating, which, in my view, is a phrase that is thrown around this House far too often. In what way does the Secretary of State think that there is gold-plating in this respect?

Vincent Cable: What small businesses usually mean by gold-plating is that they spend a great deal of time filling in forms, ticking boxes and complying with regulatory measures that impede their business activity. If that is the case in this respect, as in others, we are happy to look at it.
	Also in a deregulatory spirit, the heritage measures in the Bill implement commitments to legislation made in the Government’s response to the Penfold review of non-planning consents, which aimed to ensure that non-planning consent regimes operate in the most flexible and simplified way. The measures include bringing greater clarity on what is and what is not protected within listing buildings, and they will enable owners and local planning authorities to enter into voluntary partnership agreements to help them to manage listed buildings more effectively.
	The measures that I have outlined are designed to improve the business environment and to help to restore the UK economy to health by laying the foundations for lasting recovery.

Katy Clark: rose —

Vincent Cable: I am coming to the end of my speech.
	I have acknowledged that legislation by itself will not solve the economic challenges we face, but these measures will help to create a platform for sustainable recovery. I commend the Bill to the House.

Chuka Umunna: I beg to move,
	That this House, whilst supporting the principles of the Green Investment Bank and affirming its belief that active government should work in partnership with business to encourage long-term sustainable economic growth, facilitate enterprise, protect the rights of all, particularly low-paid, workers and simplify regulation where necessary, declines to give a Second Reading to the Enterprise and Regulatory Reform Bill because it does not provide a strategy for economic growth; believes that the Bill contains inadequate measures to boost business confidence, enhance this country’s international competitiveness, increase competition in consumer markets or protect consumers from powerful vested interests; further believes that the Bill fails to provide sufficient support to empower shareholders, investors and employees on executive remuneration to bring to an end excessive rewards for corporate failure; and is concerned that the Bill grants the Secretary of State additional powers to alter compensatory awards for unfair dismissal and contains provisions relating to the conciliation process that could dilute the rights of people at work.
	I will deal with each element of the Bill in turn and, in so doing, explain our amendment. Given the very varied nature of the Bill, that will take some time, but I will do it as swiftly as possible because many others want to take part in the debate.
	First, I want briefly to consider what the Government claim the Bill will achieve overall. In January last year, not long after the Government’s spending review, the Secretary of State told this House:
	“economic growth is now strong. It will become stronger as a result of the work that the Government are doing in stabilising finances”.—[Official Report, 13 January 2011; Vol. 521, c. 429.]
	Quite the opposite has turned out to be the case. Since the spending review, the economy has shrunk by 0.4%, we have been tipped into a double-dip recession, over 2.6 million people are now out of work, and 50 businesses are going under every single day. That was not the case back in May 2010; it is now, thanks to the policies of this low-growth Government. When my party left office, the World Bank ranked the UK fourth in the world and first in Europe for ease of doing business. This year, we have slumped to seventh place. Businesses face an increasingly difficult operating environment, not least because of the problems that sound and successful firms have found in accessing finance, with net lending to business contracting year on year in every month since this Government came into office.
	In fairness to the Secretary of State, he has recognised his and the Government’s failings. He said that they have no “compelling vision” for the country, that they lack
	“a confident message on how we will earn our living in the future”,
	and that there is
	“no connected approach across government”
	to driving growth. He suggests that the Bill will change all this. Indeed, on the day of its First Reading he said:
	“The measures in the Enterprise and Regulatory Reform Bill will help make Britain one of the most enterprise-friendly countries in the world.”
	He said that it would resolve the ongoing issue of no growth. That remains to be seen. I sincerely hope that that will be the case for the sake of our country, but I and many businesses doubt it.

Julian Smith: I challenge the hon. Gentleman’s point that Labour left the country in a good regulatory state. The CBI states that 107 of the 152 employment regulations were put on the statute book during Labour’s period in power. Was that leaving the country in a good regulatory state?

Chuka Umunna: What I cited was the World Bank’s assessment of the state in which we left the environment for businesses to carry out their work. If the hon. Gentleman reads the guidance that has been issued by his Government, he will see that we have been praised for doing things such as introducing the primary authority scheme, which was supposed to, and did, reduce the regulatory burden on businesses.
	Perhaps the Secretary of State’s most damning criticism of his and his Government’s actions is that they are “frankly, rather piecemeal”. At first sight, that is precisely what the Bill is. It is a hotch-potch of measures that provides no discernible overall vision or confident message. There is no evidence of a connected approach across Government to drive growth.
	Business was straight off the blocks with its criticisms of the Queen’s Speech, the centrepiece of which was this legislation. The director general of the British Chambers of Commerce said what many people have been saying for many months:
	“There is a big black hole when it comes to aiding business to create enterprise, generate wealth and grow.”
	He is right. Our amendment makes it clear that the Bill, viewed as a whole, does not change that assessment.
	I will quickly go through the parts of the Bill and set out our position on each.

Alok Sharma: Will the hon. Gentleman give way?

Chuka Umunna: I will make a bit of progress, because I want to ensure that there is time for others to get in.
	Part 1 will set up the green investment bank. I have stated on many occasions, as has the Leader of the Opposition, that it is crucial to long-term economic growth to have an active Government working in partnership with the private sector. In our view, the Government should work with business to identify the sectors from which future demand will come and to ensure that companies are set up to meet that demand. There is and will continue to be a growing demand for green technologies, so we need an active industrial strategy to support the low-carbon economy, as I and my right hon. Friend the Member for Don Valley (Caroline Flint) have argued.
	A critical component of that is the green investment bank. That is why we set up the green investment bank commission in 2009 with a view to establishing such a
	bank, and why we committed ourselves to establishing such a bank in our 2010 manifesto. We will therefore not oppose the bank—our amendment makes it clear that we support it in principle. Also, I do not want to add further long-term policy uncertainty in this area, after the huge uncertainty that the Government have heaped on the low-carbon sector since coming to office. I note that the deputy leader of the Liberal Democrats, who has left his place, conveniently ignored the decision on feed-in tariffs, which is perhaps the most glaring example of the uncertainty that has been created.
	As the Secretary of State said, Lord Smith of Kelvin and Sir Adrian Montague were appointed as the chair and deputy chair of UK Green Investment Bank plc during the Whitsun recess. We welcome their appointment. Having heard what the Secretary of State has said, I suggest that until this entity is given the power to borrow and to lend, allowing it to leverage its initial equity to make more capital available, it will not be a body that most people would recognise as a bank. It is a fund, whereas it is an operational bank that the country needs. The Secretary of State made has made it clear that it will not be allowed to borrow—he repeated this today—unless public sector net debt is falling as a percentage of GDP in 2015. The earliest it is likely to be able to borrow is therefore 2016. That is a delay of four years from now. Ed Matthew, the director of Transform UK, the business alliance campaigning for the bank to be set up, put it well:
	“Allowing the bank to borrow is the key to generating growth and rebooting the UK economy. Delaying this power until the economy has recovered is like a doctor waiting for a seriously ill patient to recover before giving him life-saving medicine”.

David Mowat: I am listening carefully to the shadow Secretary of State’s comments on the green investment bank. He has talked about the importance of low-carbon industries. Does he agree that the scope of the green investment bank should include the nuclear supply chain, which is far and away the biggest low-carbon industry in our country? That would enable us to lend to Sheffield Forgemasters, a company that I have heard him talk about many times.

Chuka Umunna: We will wait to see the detail that the Government come forward with in Committee. We are clear that the bank needs to step in to fill the funding gap if we are to green our economy. It is with that in mind that we will decide our position, as and when the Secretary of State comes forward with the detail.

Joan Walley: To go back one step, what my hon. Friend just read out about the need for borrowing powers was exactly the recommendation of the Environmental Audit Committee. In the Public Bill Committee, will he explore with the Government what progress has been made in respect of state aid rules to ensure that there is no impediment to getting this off the ground?

Chuka Umunna: I will be happy to do that. My hon. Friend is, of course, the Chair of that Select Committee.

Ann McKechin: Does my hon. Friend agree that the green investment bank must not be a bank of last resort that simply takes the
	projects that no one else is prepared to take, but must drive investment forward, taking the private sector with it, particularly in areas such as offshore wind, tidal power and carbon capture, which we have plenty of opportunity to develop further?

Chuka Umunna: I could not agree more. The Government have committed to additionality and we will look to ensure that that occurs.
	Part 2 of the Bill relates to employment law, which has attracted much public concern. As I have said before, we are not in a double-dip recession because of the rights that people in this country enjoy at work. No amount of sabre rattling and nonsense from Government Members about the need to allow employers to fire employees at will is going to get us out of recession. That is a simple fact. We are in a double-dip recession because of a lack of demand. Watering down employee rights will not boost demand. In fact, it is highly likely—

Sam Gyimah: Will the hon. Gentleman give way?

Chuka Umunna: I was wondering when a Government Member would seek to intervene. I will give way shortly.
	Watering down employee rights will not boost demand but is highly likely to do the opposite. As the Chartered Institute of Personnel and Development said last week, increasing job insecurity is more likely to damage growth and consumer confidence than increase them. I say to the hon. Member for Bedford (Richard Fuller) that the Federation of Small Businesses has been in contact with us today about the Government’s proposals to allow no-fault dismissal, with fewer employment protections for those working in small businesses, for which he has argued. It has said that
	“those who do take employment in small firms could be lower skilled, less productive workers willing to accept lower protection, making it even more difficult for these firms to grow”
	and that
	“there is a question that with weakened rights, employees in small firms would find getting access to credit more difficult. If so, that would make labour recruitment for small firms even harder.”

Brian Binley: Absolute nonsense!

Chuka Umunna: I say to the hon. Member for Bedford and to the hon. Member for Northampton South (Mr Binley), who says that that is absolute nonsense, that I have quoted the Federation of Small Businesses word for word. It has made it clear that replacing the need for good management with a hire-and-fire culture does not fit with its views on good employee relations.

Sam Gyimah: There is a fundamental misunderstanding here. It is a misrepresentation to say that any conversation about making it easier for both employers and employees to exit a relationship that is not working is an attack on workers’ rights. That is simply not true and it is not what the Bill tries to do. The shadow Secretary of State has mentioned that we need growth. It is important to remove everything that stops investors being confident enough to invest. Access to finance is one such thing, but so is the confidence to hire people. That is why the Bill seeks to simplify the employment tribunals system.

Dawn Primarolo: Order. A lot of Members are waiting to speak, so interventions must be brief.

Chuka Umunna: I will expand on that point in more detail later, but what I can tell the hon. Gentleman now is that when I ask businesses what is currently holding them back, most say a lack of orders and demand, not the rights that their employees enjoy at work. If we are looking to encourage businesses to hire people, why not give all micro-businesses a national insurance break—I believe he has a seat in the south-east—when they take on extra workers? That would do more to help them grow their businesses.

Brian Binley: I know that the shadow Secretary of State admires experience. He knows that I founded two companies that collectively employ 260 people. He knows that we deal with many, many small businesses, and I am involved with them on a weekly basis. I can tell him that many small businesses are frightened to take people on because they are frightened of being blackmailed, should it not work out. That is a real problem, which his party needs to face up to.

Chuka Umunna: I acknowledge the hon. Gentleman’s great wisdom and experience, but I respectfully disagree with his overall depiction of employees blackmailing their employers willy-nilly. I say that as a former employment law solicitor who has advised businesspeople like him, but employees too.

Richard Fuller: May I point out that this is the Secretary of State’s Enterprise and Regulatory Reform Bill, not mine? I am sure that mine would be somewhat different. The shadow Secretary of State talks about job protection, and about the recession and demand, but does he accept that it goes a little deeper than that? Recent experience in the UK and the US shows that when we have recovered from recessions, we have not created jobs as swiftly as we did in the ’50s, ’60s and ’70s. In that context, does he not think it is worth looking at the recommendation made by Beecroft?

Chuka Umunna: I am not sure exactly which proposal the hon. Gentleman thinks it is worth having a look at. If he is talking about the proposal to allow no-fault dismissal in firms of fewer than 10 employees—which I believe is what he spoke about earlier—the answer is no. I do not agree that it is worth looking at, partly because there is no evidence that having no-fault dismissal encourages or helps firms to grow, as was previously made clear in business questions by the Minister responsible for employment relations, the Under-Secretary of State, the hon. Member for North Norfolk (Norman Lamb).
	I do not deny that employment law and regulation more generally are matters of concern for small businesses. It would be absurd of me to make such a claim, and I am not making it. However, it is the state of our economy that has been consistently identified by small and medium-sized enterprises as the main barrier to their success. We know this because that is what they have been telling Ministers. In the Government’s latest “SME Business Barometer”—which I think the Secretary of State mentioned earlier—32% of SME employers said that the state of the economy was the main obstacle
	to the success of their business, followed by issues such as cash flow, taxation and finance. Just 7% cited regulation as the main obstacle to their success.
	Let me be absolutely clear: we on this side of the House will not countenance watering down the rights that every constituent of every Member of this House enjoys in the name of growth. I should also note that Conservative Members—nobody has made this comment today, but they have before—have been keen to present this as solely a union issue. It is not: it affects just about every working person in this country, regardless of whether they are a member of a trade union. While everyone else has been worrying about losing their job—thanks to the Government’s economic incompetence in my view—their rights at work have, frankly, been used as a political football in the Government, among Departments and between the two governing parties. That does nothing to dispel the overall impression of shambles that hangs over the Government. However, Minsters and those who have been briefing the media on their behalf should also reflect on the huge worry that such briefing on employment law is generating among those who work in our businesses, with all the talk of further liberalising our labour market, which is one the most liberalised labour markets in the western world.

Sandra Osborne: Will my hon. Friend give way?

Chuka Umunna: I will give way shortly.
	The Secretary of State has quite rightly said that it is not the job of the Government to “scare the wits” out of people, but that is what the Government have been doing—

Julian Smith: No it isn’t.

Chuka Umunna: Yes it is: it is precisely what they have been doing with the promotion of the Beecroft report by the Prime Minister and others. I should say that the Secretary of State is no innocent bystander. His little chat with The Sun on Saturday evening generated an article in that paper yesterday carrying the headline “Quick Cash for Sack”. This hardly reassures vulnerable employees who are anxious about their job security.
	That article was, of course, the pre-spin for the new measure—which has been mentioned today—to prevent employees from using a pay-off offer as evidence in a tribunal. The measure will presumably be inserted in the provisions in the Bill that deal with the new settlement agreements. We were notified of the proposal only when I read my copy of The Sun yesterday, as it did not appear in the Bill or the explanatory notes, so we have not had proper time to consider it. At first sight, it is questionable whether it would work in practice. As a former employment lawyer like me, the Minister responsible for employment relations will know that essential components of an employment relationship are trust and confidence between the parties. How on earth can trust and confidence continue to exist if a pay-off offer is made out of the blue when the employee has done nothing wrong and decides to reject the offer? What happens then? This needs further clarification. So too do the Government’s intentions in relation to the employment law provisions of the Bill and the Beecroft
	report, because, further to the questions that Labour Members have asked the Secretary of State, I am no clearer about how many parts of the Beecroft report will potentially be inserted in the Bill.

Julian Smith: I assume that the hon. Gentleman, as a former employer lawyer, was involved in negotiating compromise agreements. Surely the proposals that we are discussing this evening are just simplified compromise agreements for smaller companies which will be much easier to administer and will not involve payment of the fees that I am sure he earned advising bigger companies on such agreements.

Chuka Umunna: No, the hon. Gentleman is wrong. As things stand, the position in law is that if a pay-off offer is made during a “without prejudice” discussion between an employee and an employer—which would take place if there was an ongoing dispute—that cannot be adduced as evidence in court. However, if a pay-off offer was made out of the blue where there was no pre-existing dispute, that could be adduced as evidence. What I discern from what is being proposed is that the Government are seeking to ensure that that situation is covered too, so that such an offer could not be adduced in evidence in court either. [ Interruption. ] I believe that the Minister responsible for employment relations is agreeing with my interpretation. My issue with that is that if an employee in a firm is quite happy and believes that they have done nothing wrong, but the employer does not like them for some reason, decides that they are going to get rid of them and offers them a set sum, the employee should be able to adduce that as evidence to show that the employer was intent on getting rid of them come what may. That is the point that I am seeking to make.
	Further clarification will be needed. However, let me once again ask the Secretary of State—I will give way to him on this point—how many parts of the Beecroft report are going to be inserted in the Bill by way of amendment, if any. He has—I think—been clear with us today that the proposal for a no-fault dismissal measure, on which the consultation has just closed, will not feature in the Bill. How many other parts of Beecroft are likely to feature in the Bill through amendments? I am happy to give way to him if he is willing to answer that question.

Vincent Cable: As far as I am aware there are none, but the hon. Gentleman will be aware that the Beecroft report covers a wide range of activities, including things such as immigration control, which clearly do not belong in this Bill. However, as far as I am aware, no other provisions are allowed for in this case.

Chuka Umunna: I am slightly surprised by that answer because of the equivocation. The Secretary of State commissioned the report—it was his report—and this is his Bill, so surely he can provide us all with a categorical assurance now that no elements of Beecroft will feature in the Bill. I am happy to give way again, if he wishes to clarify that point. No? I think that people will note his failure to reply.
	With regard to what is in the Bill, our amendment makes it clear that the proposals to grant the Secretary of State new powers to vary the limits for compensatory awards in unfair dismissal cases are totally unacceptable. Clause 12 proposes to give the Secretary of State the power to cap the compensatory award, which is currently capped at £72,300, at a maximum of between median earnings and three times median earnings—that is, between £26,000 and £78,000—or one year’s earnings, or whichever is the lower of the two. No advance warning of this measure was given, and there has been no consultation on it. Why? It is also hard to see the justification for the proposal when we consider that the median award for unfair dismissal came in at just over £6,000 in the past year.
	The practical effect of the proposal would be that those on average or above-average earnings—middle income earners in particular—would not be properly compensated if they were treated unfairly by their employers. Let us be clear who we are talking about. This would affect accountants, architects, chartered surveyors, insurance brokers, lawyers and mechanical engineers, as well as many other public service professionals. Those people are all in occupations that attract average or above-average earnings. Lower income earners in this country have already been hit hard by the Chancellor’s Budgets since this Government came to office. It is middle income earners who stand to suffer most from this change. Of course, those earning millions every year—who have just been given a huge tax break by the Government—no doubt have plenty in the bank and will not have to worry about this, but that does not apply to the majority of earners in this country.

Julian Smith: Does the shadow Secretary of State think it reasonable that, in 1999, the compensatory award level was £12,000 and that it is now £72,300? Does he think that it has gone up by a reasonable amount over that period?

Chuka Umunna: I think it is reasonable, when people have been treated in an appalling and unfair fashion by their employers, that they should be properly compensated.
	The Bill contains a related measure to give the Secretary of State the power to vary compensatory awards for employers of different descriptions. The Employment Lawyers Association, of which I used to be a member, said last week that having different rules for micro-businesses, for example, would make people think twice about working for small businesses, knowing that they would have less employment protection than if they worked for a large employer.
	We have no objection in principle to the proposal to introduce early conciliation by ACAS in advance of the full submission of a claim to the employment tribunal. I understand, however, that the Government intend to spell out more of the detail in secondary legislation. It is therefore essential that any future regulations be subject to the proper scrutiny of the House. Early conciliation will result in a claimant who is seeking redress having to go through two different processes, with different time limits and different forms to fill in, before instituting a claim. It will therefore be important to ensure, particularly in relation to unrepresented claimants or those with poor literacy and numeracy, that the new regime does not act as a barrier to justice for those seeking redress.
	Above all, it will be important to ensure that ACAS is properly resourced to carry out its proposed new expanded role. We know that its resources have already been reduced. The Secretary of State and his Ministers will need to give proper assurances and guarantees that it will be properly resourced to carry out this work.
	The Bill also contains measures relating to the composition and workings of employment tribunals. As I have said before, we are not opposed to reforming the way in which employment tribunals work, given the frequent problems that employees and employers experience while navigating their way through the system. That is why we supported the establishment of the Underhill review. However, that is quite different from tampering with people’s fundamental rights at work, which we oppose.

Geraint Davies: Is my hon. Friend aware that, in Wales, 70% of procurement goes to small and medium-sized enterprises, half of which are based in Wales? In England, however, the figure is around 7%. Would it not be a better strategy for rejuvenating small businesses in England if we were to focus the power of procurement—green procurement in particular—on those businesses, rather than slashing the rights of the people who work in them?

Chuka Umunna: I certainly agree that we should increase the procurement opportunities for our SMEs. When we were in government, we put in place a number of targets, which this Government have sought to build on. We should certainly ensure that those businesses have better access to those opportunities; I speak to many such businesses that tell me that they do not.

Stephen Pound: Further to my hon. Friend’s point about the additional costs and duties that will descend upon the shoulders of ACAS, does he agree that this Government have a poor record, particularly in the area of the fitness to work test? What might seem to be a saving often ends up costing them an enormous amount of money. I do not wish to distract him with the good news that has just reached us of the inspirational leadership of Roy Hodgson in Donetsk—I believe that 1-1 is the precise figure—but does he see a need for primary legislation or orders to provide the additional sums that ACAS will inevitably require, or does he think that an amount of money been put to one side for the purpose? ACAS will be facing a heavy demand and will require a great deal of money.

Chuka Umunna: First, I thank my hon. Friend for that update from the European championship—

Stephen Pound: Full time!

Chuka Umunna: I stand corrected. On my hon. Friend’s point about the resourcing of ACAS, we do not know what its budget will be for the next three years. We shall study that question carefully in the light of the, I think, £12 million reduction in its budget over the recent period.
	I shall return to the composition of employment tribunals. The Bill envisages simple or low-value claims being decided by a legal officer without the need for a hearing. That might assist in the rapid resolution of disputes, which would be welcome, but it is important
	that any decision made by those officers should be able to be reviewed by an employment judge if either party so wished. We are currently considering a four-track system: simple claims covering issues such as amounts of holiday pay could be dealt with outside the tribunal, perhaps by a legal officer; standard unfair dismissal claims would be dealt with by tribunals in the usual way; complicated equal pay claims could be dealt with by a specialist court; and high-value claims could automatically be dealt with by a higher court.
	We do not welcome the Government’s proposal that all employment appeal tribunal cases be heard, in the main, by a judge alone, instead of by a panel including lay members. We oppose that—[ Interruption. ] The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb) says, “For goodness’ sake”, but lay members are very much welcomed by employees and employers as they provide balance and perspective to deliberations. That extends to deliberations in the employment appeal tribunal on legal issues.
	Before I move on to the competition aspects of the Bill—I am aware that I am going on—I want to mention that there are other employment proposals that we will address in more detail in Committee.

Brian Binley: rose —

Chuka Umunna: I will make some progress, so that the hon. Gentleman will have more time to speak later.
	Principally, those proposals include: the provision of financial penalties to be paid by employers where there are aggravating features to their wrongdoing; the introduction of a public interest test to whistleblowing—which we have concerns about—to clear up the uncertainties in that area; and changes to the annual increases to the limits to statutory redundancy pay.
	I will now deal as quickly as possible with the competition aspects of the Bill. Healthy, competitive markets reward the innovator, the insurgent, and the risk taker. They keep incumbents on their toes, benefiting consumers, and they create the disciplines at home that drive success abroad. That does not happen by itself, however, because markets are not always efficient. I know that that view is not shared by all Government Members. So even when policy frameworks can correct market failures, markets require active stewardship, constant vigilance against unhealthy concentrations of power—News International —and, above all, the deliberate promotion of competition through a strong, robust competition regime.
	The Government said in their consultation paper on options for reform published last year:
	“The Government acknowledges that it has inherited a competition regime which has been independently assessed as world class.”
	In 2010, the Global Competition Reviewawarded the Competition Commission its highest rating of five stars, and the Office of Fair Trading was awarded four and a half stars, with both bodies appearing in the top five agencies in the world. We Labour Members are rightly proud of the legacy our Labour Government bequeathed to the current Conservative-led Administration.
	In principle, we support the Bill’s proposals to improve our competition regime. There is definitely some sense in combining the OFT and the Competition Commission into one body, removing duplication and concentrating
	expertise in one place. However, the yardstick against which we will measure these reforms is whether they will improve on the existing regime or not. The OFT estimated that in ensuring a level playing field, our competition regime benefited businesses and consumers to the tune of £700 million last year. As the
	 Financial Times
	has pointed out, the expected savings of £1.3 million a year from the merger could be smaller than the cost to consumers and businesses if these reforms change our competition regime for the worse.
	In addition, the lack of competition is, sadly, nowhere more stark than in the small and medium-sized enterprises lending market where 85% of SME lending is concentrated in the hands of our four biggest banks. This can be contrasted with Germany, where just 14% of business loans come from its biggest banks and 60% come from its smaller local and co-operative banks, which I met when I was in Germany in February. It is a shame that the Government have shown no interest in pursuing the idea that we have been promoting for some time—of having a British investment bank to help address this issue. It is a concept that enjoys the support of the British Chambers of Commerce, among others. We are also concerned about the withdrawal of consumer competences entirely from this new body. Indeed, we have argued that the Queen’s Speech should have delivered a fair deal for consumers with a consumers Bill that would give new powers to the Financial Conduct Authority and the Competition and Markets Authority to stop rip-off surcharges by banks, low-cost airlines and pension firms.
	Let me move on to part 5, which deals with the reduction of regulatory burdens. We should seek to reduce regulatory burdens where we can, but—very importantly—not by compromising the rights of employees or the health and safety of employees and customers. This is an issue not just of the quantity of regulation, but of its quality, too: regulations should be drawn up with the small guy in mind—people who do not have the resources to pay for an army of lawyers, accountants and risk managers to advise on how to ensure compliance. As I said earlier, with that in mind, when in government, we introduced the primary authority scheme so that any business operating in multiple local authorities could, to ease the regulatory burden locally, form a partnership with a single local authority to access advice and support for its regulatory responsibilities. I welcome the fact that the Government seek to extend the scope of the scheme through the Bill.
	What are far less welcome in part 5 are the measures touching on the Equality and Human Rights Commission, which the Secretary of State has just referred to as “regulatory tidying-up”. This Bill seeks to amend the Equality Act 2006 by repealing the commission’s general duty to exercise its functions with a view to encouraging and supporting the development of a society in which people’s ability to achieve their potential is not limited by prejudice or discrimination, in which there is respect for and protection of each individual’s human rights and respect for the dignity and worth of each individual, in which each individual has an equal opportunity to participate in society, and in which there is mutual respect between groups based on the understanding and valuing of diversity and on shared respect for equality and human rights.
	This Government have an image problem. They are seen as out of touch, and they are seen as implementing policy changes that adversely impact particularly on vulnerable and poor people. Just yesterday, the Prime Minister’s former speech writer said the Government’s latest proposals on immigration policy showed that the Conservatives were a “nasty party” that risked losing votes among ethnic minority communities. In this context, why on earth are this Conservative-led Government seeking to repeal this general duty that seeks to promote fundamental values of humanity and decency in our society? I am at a complete loss to understand why they should seek to do this when that duty enjoyed cross-party support when the Equality Act 2006 progressed through Parliament.
	The Government also want to change the commission’s statutory remit, contract out its helpline, stop its grant programme and slash its budget by 60%. This is not regulatory tidying-up; it is undermining the effectiveness and independence of the organisation. If what we are seeing here is the beginning of the end of the commission—and in the light of what I have said, it is entirely reasonable to raise this as a question—for the avoidance of doubt, let me say that this party will fight tooth and nail against any such move.
	Finally, I shall deal with part 6, which puts in place additional measures to deal with executive pay. In order to build a more productive and responsible capitalism, it is important to ensure we bring an end to excessive pay and rewards for failure, which are bad for our economy and for our businesses. The Prime Minister and the Chancellor have sought to insinuate that proponents of reform in this area are being “anti-business”, but the recent wave of shareholder revolts has shown just how out of touch they are with business and investor opinion on these issues. Shareholders at Citigroup, Credit Suisse, Barclays, Mann Group, Aviva and other companies have all either been protesting or voting against remuneration packages over this last couple of months. WPP shareholders will be voting on the remuneration of that company’s senior executives later this week.
	In fact, the highly respected business leader, Sir Michael Darrington, the former group managing director of Greggs plc, has founded a pressure group—“Pro-Business, Against Greed”. Its aim is to reduce the excessive and growing difference in net pay between the highest paid and the majority, which he says
	“is intended to help promote a happier, healthier and fairer society as well as being better for pensioners and investors.”
	We congratulate him on that initiative because change and reform must be led by people like Sir Michael, who is also a shareholder in Aviva and Trinity Mirror, with Government backing.
	In government—it is a shame that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) is not in his place to hear this—we started to improve corporate governance in this area and to empower shareholders. We introduced advisory shareholder votes on remuneration reports, which are creating so many headlines at present. It is not fair to say that we did nothing about this matter in government.
	Currently, there is a prohibition in statute on the remuneration of executives of quoted companies whose pay is contingent on the outcome of a shareholder resolutions. This Bill will remove that prohibition, paving
	the way for further reform. It will enable the Government to build on our reforms by, for example, having an annual binding vote on future remuneration policy, increasing the level of support required on votes on future remuneration policy and so forth. I was glad to hear the Secretary of State confirm that he intends to bring those reforms forward as amendments to the Bill as it passes through this House. That is welcome.
	On the annual binding shareholder vote in particular, we agree with the suggestion put forward by asset managers Fidelity Worldwide Investment that a 75% majority should be required in respect of a binding vote on future remuneration policy. I would be interested to hear what the Secretary of State thinks of that, as I must say that it was with great disappointment that we read that he is likely to row back not only from that proposal, but from the one to have these votes on an annual basis. That represents quite a watering down of his initial proposals. If he would like to disabuse me of that, I would be happy to give way to him now.

Vincent Cable: Current thinking—we are yet to report back to the House formally on the consultation—is that there will be annual votes if pay policy is changed by companies. The investor community made it absolutely clear that it sees that as a much more productive way of progressing its concerns.

Chuka Umunna: I am glad to hear that, but I wonder where all the briefing in the Sunday newspapers yesterday, including The Sunday Times, The Sunday Telegraph and others, came from. I am sure that the Treasury had absolutely nothing whatever to do with that. We, of course, have already called for the full implementation of the High Pay Commission’s recommendations, including the proposals for employee representatives on remuneration committees, which the Government continue to refuse to implement.
	On copyright, the proposals in clause 56 to amend the Copyright, Designs and Patents Act 1988, which I think the Secretary of State mentioned, are broadly drawn and, in our view, need greater clarity, not least to indicate that this power cannot be used to weaken the copyright regime.
	Let me conclude. It has admittedly been something of marathon working through this Bill because it is such a hotch-potch of measures. As I have explained, there are parts of the Bill, taken separately, that we support in principle and will seek to improve in the later stages. However, other parts, particularly relating to employment, are, as drafted, simply unacceptable. Yet again, after going through all this, we find ourselves back where we started: in a big black hole when it comes to helping businesses to create enterprise, generate wealth, and grow. There is no compelling vision, no confident message about how we are to pay our way in the world, and no connected approach across Government to drive growth. That is the point that we sought to make in our amendment, which I commend to the House.

Several hon. Members: rose —

Dawn Primarolo: Order. Before I call the next speaker, I must inform the House that all Back-Bench speeches will be limited to eight minutes from now on. Many Members wish to contribute,
	and if we do not make enough progress to enable all of them to do so, it may be necessary for the limit to be reduced further.

David Ruffley: It is always a pleasure to listen to the hon. Member for Streatham (Mr Umunna), who invariably makes his case with courtesy and rationality, but on this occasion I do not agree with the thrust of his speech.
	Making the United Kingdom economy much more competitive is vital if we are to weather the storms following the fallout from the eurozone catastrophe while also facing the inexorable rise of far-eastern economies. Deregulation is a key part of that.
	All Governments launch initiatives to create bonfires of regulation and to slash red tape. But is it not remarkable that the intended beneficiaries of such anti-regulation drives so rarely tell Members of Parliament that they believe that the regulatory burden has been reduced? After 15 years in the House, I have yet to meet a business constituent who has said that. In each year of the last Parliament—this will be the only instance of my straying into the realm of party-political knockabout—the Labour Government created six new regulations every working day, and as a result the coalition Government have a massive burden of over-regulation to identify and, in my view, eliminate.
	The changes relating to employment in part 2 of the Bill are certainly needed. The number of unfair dismissal claims doubled from 100,000 in 2002-03 to 218,100 in 2010-11. That is a staggering increase, and, according to the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for North Norfolk (Norman Lamb), it costs businesses an average of £4,000 to defend each claim. It is hardly surprising that employers say that they are discouraged from taking on new employees at the margin, especially at a time when business confidence is so low.
	Let me give a parochial example. Two self-made businessmen, one working in food retail and the other in furniture retail—both started with nothing, and both are very good employers—told me that the chief factor in the decision whether to take on new employees this year was the problem of unfair dismissal claims and vexatious claims. Both had had unfortunate experiences in the last year. I visited their companies, and I do not think that they were telling porkies.
	We should not accept the caricature presented by some Opposition Members who have suggested that liberalising the labour market even further is an exclusively right-wing idea. Those who follow these matters carefully rather than jeering in the cheaper seats in the back will know that, according to the distinguished left-of-centre employment law professor Pietro Ichino—he is very much on the left of Italian politics—there is an equality issue between the very well-protected employed and the unemployed who stay unemployed because of over-regulation in the market.
	Unfortunately, although the Secretary of State has already raised the qualification threshold for unfair dismissal from one to two years, he has ruled out exempting small businesses—micro-businesses—from various employment laws. Perhaps the Minister will explain why the Government have turned their face against exempting businesses that employ fewer than 10 people from the full panoply of
	unfair dismissal law when it comes to young workers. The high cost of youth unemployment surely suggests that we should try that, if only for a limited period, to see what the results are. I should have thought that those who are worried about youth unemployment could not disagree with such a proposition for a minute, but if they are not satisfied with my argument, what about the evidence?
	In 2004, businesses in Germany with fewer than 10 employees were exempted from the requirement to provide cause when letting an employee go. Before that, the threshold was only five employees. Did unemployment rise as a result? No, it did not. In 2005, overall unemployment in Germany was more than 11.5%; now it is 7.5%. Among those under 25, it has fallen from 12.5% to 6.3%. That is due not only to the slightly more relaxed regime for small businesses in Germany, but to the fact that mini and midi-businesses were subject to much more generous and simpler social security contribution regimes. The hon. Member for Streatham suggested national insurance breaks for small businesses employers, and I am sympathetic to that idea, but the evidence shows that the exemption system worked in Germany.

Chuka Umunna: Will the hon. Gentleman give way?

David Ruffley: No, I want to make some progress.
	Part 5 deals with legislative burdens more generally. Clause 49 proposes an increase in Ministers’ power to introduce sunset provisions, and I welcome that. We may be one of the first countries to use sunset clauses as a matter of course in all regulatory policy. Some states, such as Germany, use them sporadically, but no EU states use them systematically, and not even the United States uses them across the board. Our Government are leading the way in reducing regulatory levels by providing for their use in all legislation, as far as possible, throughout Whitehall.
	Finally, let me say something about one in, one out. There has been some early modest success in that regard, but I should be grateful if Ministers would consider a proposal which the last Government toyed with, but did not proceed with, in 2008. I refer to regulatory budgets, which would set a figure for the value and cost of regulations in any particular Department. That proposal was not included in the 2008 Labour consultation, but many of us have been considering ways in which, if a budget went bust because too many regulations were being imposed on business, the Department would be subject to the sanction of reductions in its public expenditure settlement with the Treasury. That would certainly hold Ministers’ and senior civil servants’ feet to the fire. Perhaps the Minister will tell us whether the Government will consider it.

William Bain: Several weeks ago, the Business Secretary revealed publicly to The Guardian something that the country already knew to be true: that the Government have no convincing narrative when it comes to running the country. That is particularly true in relation to the disastrous state of our economy. The Office for Budget Responsibility has downgraded the forecast for the growth in business
	investment in the wake of this year’s Budget from 7.7% to a pitiful 0.7%, which is well below the forecast for Germany and the United States, while in Scotland, the Bank of Scotland’s purchasing managers index revealed only this morning that private sector growth was at a 17-month low.
	The Bill should therefore have presented an opportunity for a radical change of course. It should have started the process of dealing with the crisis of lack of economic demand, as well as the shortage of work in our country, which means that 20 people chase every job advertised in my constituency, and the lack of business investment, particularly in the green economy. With youth unemployment standing at over 1 million, the Bill should have made it easier to hire young people through an employers’ national insurance holiday, and have started to tackle the crisis of underemployment in our country, with 6.3 million people crying out for full-time work but unable to find it, rather than promoting a failed ideology by making it easier to fire people.
	The Bill fails to acknowledge that the Government promised they would grow the economy and cut debt, yet since the 2010 spending review they have shrunk the economy and grown national debt. They choked off the economic recovery that was taking root under the previous Government in early 2010, and have instead presided over the slowest emergence from a slump since the long depression of the 1870s.
	We were told that, by slashing the public sector quickly and deeply, the invisible hand of the private sector would be free to guide a strong recovery. Who among Members on the Government Benches would credibly make that claim today, when in this financial year, with the cuts in public spending due to start biting hard, the OBR has downgraded its projected growth for the economy from 2.5% to 0.7%, followed by the OECD and the Bank of England?
	Our financial system is failing to generate credit to stimulate sufficient private sector activity. Lending to small and medium-sized businesses has fallen for five consecutive quarters, while, even at the height of the recession, in Germany, with its more balanced banking system, bank lending by the Sparkassen, or local savings banks, continued to rise.
	The Business Secretary trumpeted Project Merlin and then credit easing as the answers, but the truth is that British businesses face a shortfall in available finance of £190 billion over the next decade, while £700 billion of private sector capital is failing to be put to sufficiently productive use in our economy.
	The Bank of England has printed £325 billion through quantitative easing for use in its asset purchase scheme, and that has provided some monetary stimulus for growth, but this money has mainly been used to purchase gilts and to prop up bank balance sheets, instead of finding its way directly to SMEs or into the real economy on our high streets. Only today, Adam Posen, the external member of the Bank of England’s Monetary Policy Committee, has reiterated his call for that money to be used to purchase private sector assets, by emphasising the argument that a lack of economic confidence can feed on itself. That shows the scale of the missed opportunity in this Bill.
	In the 1930s, the lost output was restored within 48 months of the beginning of the economic crisis. Now, under the business policies followed by this
	Government—which are not reversed by this Bill—as the National Institute of Economic and Social Research suggests, it may take 72 months, and counting, to restore the lost output, as the economy has spluttered to a halt in the last two years.
	Real wages have fallen every month that this Government have been in office, amidst the biggest squeeze in living standards since the 1920s. This Bill should have marked a turning point away from what even the credit rating agencies have described as an entirely self-defeating policy of austerity.
	Some of the Bill’s measures are welcome in so far as they go, but even with the establishment of the green investment bank, the whole is less than the sum of its parts and fails to meet the scale of the challenge in respect of the potential for green growth, as stated by the UN Environment Programme in its report of last autumn. WWF UK has estimated that infrastructure investment on a scale of between £220 billion and £330 billion is needed to create the number of green jobs required over the next decade, yet the bank will have start-up public capital of only £3 billion, which is just 0.2% of GDP, with no likelihood of borrowing powers by 2016. That is a result of the Chancellor’s failure on growth, leading to borrowing being £150 billion higher than he forecast in June 2010.
	The Bill presented a real opportunity for the Government to consider the Opposition’s proposal to establish a proper national investment bank and make use of the UK’s current low long-term interest rates. In 2008, business investment in the US, Germany and France was 11.7%, 12.3% and 12.7% respectively, whereas in this country it was only 10.2%. As Gerald Holtham demonstrated in a report for the Institute for Public Policy Research last year, a properly capitalised national investment bank could be achieved, increasing investment in manufacturing and the green economy without breaching even this Government’s fiscal rules.
	This Bill should also have marked a shift towards restoring the link between economic growth, living standards and productivity. As the Resolution Foundation showed last year, in the 30 years from 1977 the share of every £1 of GDP going into the wage packets of people in the lower half of the income scale fell from 33p to just 12p. There should have been policies to establish a proper living wage as well, given that the Resolution Foundation has also shown that the costs, even to big business, of such a move would be in the order of less than 1%.
	It is especially alarming that the Government are considering watering down their extremely modest proposals to tackle the inequality gap between top pay and the pay received by rest of the country. Given both that and their attitude on rights of work, the Government show in this Bill that they have no plan to stimulate demand. This is the no-change Bill from the no-growth Government.

Margot James: I welcome the many excellent measures in the Bill that lay the foundations for a low-carbon economy, with the green investment bank being established and the proposed changes to the competition regime, which should simplify matters for business and reduce costs.
	I want to focus on the employment law reform provisions, however, as that is the one part of the Bill on which I hope the Government will be persuaded in Committee
	to move. I want them to go a little further in redressing the balance in law between employers and employees. In no way do I seek to establish some sort of “hire and fire” culture; I very much agree that that would be to the detriment of not only employees, but business. However, I welcome the provisions enabling disputes to be resolved at a much earlier stage, without the need to go to an employment tribunal. That will be a help to both employer and employee, and it is anticipated that 25% fewer claims will end up going to a tribunal as a result, which will save public money and company time and resources. We have also heard this afternoon that any employer offer of a settlement earlier in the process will no longer prejudice the company’s position in any subsequent tribunal hearing. That is a welcome development, and I look forward to hearing further details.
	Contrary to the fears that some Opposition Members have expressed, nothing in this Bill changes an individual’s statutory employment rights, but that causes a degree of concern to many of us who have been in business and therefore know how far the balance has tilted towards the rights of the employee, especially in unfair dismissal claims. I took some soundings from people with whom I have in the past been in business, and I want to quote the comments of somebody who does not want to be named. She told me:
	“Tribunal culture in the UK means the employer is on the back foot. We have agreed to pay off employees (who have appointed no win-no fee lawyers) that have threatened to take us to court, even when they have no real case, as the amount of time/energy it takes us to fight our case at a tribunal is too high, even when we as employers think we are in the right. This area I feel is the most onerous for me as an employer currently. And for someone with a social conscience, I don’t like paying someone off when they are in the wrong, just because it is the most cost effective thing to do for the business.”
	Research by the chamber of commerce among firms employing between 10 and 49 people has confirmed what that individual told me. It revealed that 21% of respondents had been threatened with an employment tribunal in the previous three years, and of those 37% had opted to settle out of court. Many employers of fewer than 20 people simply cannot afford the specialist HR resource required to enable them to defend their position in a tribunal. Only 20% of respondents to the survey defended their claim, and although it was heartening to read that, of those, three quarters won their case, some of the comments quoted verbatim in the research are salutary. One HR director said that he
	“cannot emphasise enough how burdensome and draining it is to dismiss people who are performing very poorly or are abusing the rules.”
	Another said:
	“We won our claim, however the stress was off the scale, it cost our company over £20,000 for something that was never our fault.”
	I welcome the review of a related matter—health and safety regulations—being undertaken by the Department for Work and Pensions. That has a considerable bearing on employment law. Although it is beyond the scope of the Bill, I hope that Ministers will confer with their DWP counterparts, as 54% of respondents to that chamber of commerce survey cited concerns about the operation of health and safety rules. A company in my constituency employing between 100 and 150 people, even though it is in many ways a model employer, suffers two or three cases a year of vexatious claims by
	employees, and even ex-employees, who have created a spurious claim based on an accident they had at work. The company is then in the position of having to prove to the court that it created proper conditions that should have prevented the accident—the onus is on the company to prove that it took adequate measures. That is but one example of the many areas beyond unfair dismissal where, I believe, the rights of the employee are now too far out of kilter with the rights of the employer.

Julian Smith: I think my hon. Friend gets an extra minute for taking my intervention. Does she agree that there is an impact on growth, because when a small company is having to deal with all these issues in employment tribunals, it is not able to focus on creating more jobs and growth? That is what Opposition Members sometimes appear to fail to understand.

Margot James: My hon. Friend makes a good point. The problem is not just the cost of defending claims, but the management time involved. That detracts from the energy that companies need to fight in the market for business. There is no doubt about that.

Brian Binley: Will my hon. Friend give way? She will get another minute if she does.

Margot James: I will give way once more, but I will not take all the extra time.

Brian Binley: I am most grateful. Does my hon. Friend recognise that, for some small businesses, two days and the prior work necessary to attend a tribunal cost £10,000? Many shy away from taking that course, even though they think they are right, because they simply cannot afford that.

Margot James: rose—

Dawn Primarolo: Order. It is quite true that the hon. Lady gets extra time for taking interventions, but of course that takes time from Members who are waiting to speak. Mr Binley and Mr Smith, you might remember that.

Margot James: Thank you, Madam Deputy Speaker. I am conscious of that and I will not take all the additional time allotted.
	My hon. Friend the Member for Northampton South (Mr Binley) made a good point. The cost in time and money of fighting claims is a huge disincentive, especially to very small companies. That is why I believe we should give micro-businesses special consideration and partial exemptions from some of the measures in the Bill. I hope that the Government will take on board the views expressed by my colleagues and I today, and the concerns voiced by the many reasonable employers who try to do the right thing by their work force. The volume, complexity and, I believe, bias of current law, which allows vexatious and sometimes spurious claims to be brought in the first place, is what needs to be changed fundamentally, alongside the very good measures the Government propose in the Bill.

Adrian Bailey: I rise to support the reasoned amendment. I consider that the appropriate course, because although there are some bad things in the Bill, it also contains a lot of good measures that should be supported.
	What is bad is the fact that, as far as business is concerned, the Bill is about as good as the Government are prepared to offer. At a time of double-dip recession, when consumer spending is squeezed and could well contract further, manufacturing is struggling and private sector investment is almost negative, there was an opportunity for the Government to produce a Bill that would play a major role in reversing those trends. Instead, we got a rag-bag of measures, some quite good in themselves, cobbled together in an omnibus Bill that has no focus and no clear relevance to meeting the challenges facing our economy today. Businesses are crying out for something far more dramatic, such as investment in construction or a business bank—major action by the Government that will help to stimulate private sector investment, increase employment and improve consumer spending—but this Bill is all they have got. Even the Secretary of State admitted that the measures in the Bill would not reverse the current economic problems.
	Many of the measures are Labour’s ideas—the green investment bank, the provisions on shareholders and the primary authority scheme. I admit that the present Government have developed those ideas, but given the controversy that some of them have generated within the Government ranks, they cannot avoid the overriding perception that this Government appreciate the logic of what Labour initiated, but do not have the political conviction or passion to implement those ideas in a way that will deliver on their objectives.
	I welcome the green investment bank. Originally Labour’s idea, its implementation has taken two years, amidst oft-reported squabbling between the Department and the Treasury. In three years, it will—perhaps—be able to do what banks are expected to do: borrow and recycle the money; however, that is subject to the public accounts being in an appropriate state. That is hardly the sort of approach that will generate the certainty needed to encourage investors to put money into the bank, so funds will be available for redistributing.

Michael Crockart: Will the hon. Gentleman give way?

Adrian Bailey: All right. I will try not to use my full time.

Michael Crockart: The hon. Gentleman is making an interesting point, but surely he must accept that the fact that £750 million is available this year to invest in green projects is a massive step forward.

Adrian Bailey: I accept that that is better than nothing, but it falls far short of the Ernst and Young assessment of what is needed for the green investment bank to generate a green economy. Other surveys also underpin the original Ernst and Young one. No provision is being made for reviewing and reporting on the bank to obtain some sort of public estimate of just how far it is fulfilling the role it should have. No provision is being made for procurement for small and medium-sized
	enterprises, although I welcomed the Minister’s comments about the amount of funds that are going in their direction. In addition, there is a real risk that the opportunity to develop a green economy will be lost because the so-called “green investment bank” will just become a niche fund, instead of being what it should be—a driver to develop a green economy, with all the benefits and all the employment that will come with it, as we see in Germany.
	A lot has been said about regulation, and I echo the welcome my hon. Friend the Member for Streatham (Mr Umunna) gave for measures to provide for a conciliation service that will obviate the need for some employment tribunals; anything that can make easier the complex and sometimes stressful process—for both employee and employer—is to be welcomed. My concerns centre on the resource and funding issue for ACAS that has been raised by a number of hon. Members. Undoubtedly, the Bill places far greater stress on ACAS, giving it a far greater role and far greater responsibilities, but there is no evidence that the resources will be put in place to enable it to match those responsibilities. I would be interested to know whether the Government have done any research on whether this approach will generate more complaints. Undoubtedly, some employees do not take their employer to a tribunal because they would find doing so too stressful. If the option of a conciliation service that avoids the need to go to tribunal is available, that may actually generate more claims. I do not know whether that will be the case, but the Government should examine the matter, particularly in the context of their funding for ACAS.
	The proposal for the competition and markets authority is, in general, good, but I have concern about one particular aspect: the offloading of some of the consumer education role of the Office of Fair Trading to Citizens Advice. I have nothing but praise for Citizens Advice, but I am concerned, given the funding cuts it is enduring at the moment, about whether it will be in a position to carry out that sort of additional responsibility in a way that will benefit the community. The Government need to examine that resourcing issue.
	I promised that I would not use up all my time, so I shall conclude by saying that although the Bill is not all bad, it totally fails to address the major challenge that is confronting the Government and which the business community wants it to confront. The Bill is symptomatic of a Government who have few ideas, and I suspect that those they do have are being strangled by Treasury orthodoxy. The Government need growth and the country needs growth, but these measures will not deliver it.

Richard Fuller: As our national economy searches for growth, we look for direction. As our small businesses, our shopkeepers and our entrepreneurs struggle with unyielding burdens, they look for relief. As many who are unemployed, both short-term and long-term, continue their search for employment, they ask for hope. And so we turn for inspiration to the Enterprise and Regulatory Reform Bill. Here was our chance to send a clear message that we were going to roll back the European regulation that is calcifying the spirit of enterprise. Here was the opportunity to come forward with new ideas and initiatives for new funding sources to assist in dealing with the gap in funding for our small businesses.
	Here was an opportunity to press for changes in the jobs tax and to look for more tax deductions for people who wish to put their capital at risk in our small businesses. Here was an opportunity indeed to send a clear message to our local bureaucrats, with their pettifogging rules and regulations which are causing more misery to shopkeepers in our town centres, that they should stand back a bit and understand how hard it is in many town centres for small businesses to make progress. This Bill was the opportunity to address all those things, and I look forward to hearing in Committee how we have done on all of them.
	I wish to address one part of the Bill, and it relates to what has been termed “hire and fire” and what has been termed “compensated no-fault dismissals”. I do this because I do not feel that Adrian Beecroft’s proposals have been given due consideration. There are strong arguments on both sides as to whether or not we should implement them, but we have not investigated the issues sufficiently carefully and it is wrong to dismiss the proposals with ridicule, with abuse or with fearmongering. Let me explain why that is.
	If we look at the issues in developed economies, particularly those of the United Kingdom and the United States, relating to how we recover from recessions, we discover that our economies are finding it tougher to create jobs as we recover. In the period before the 1990s, it took on average about six months from the economy recovering for it to reach full employment. Since the 1990s, the figure has gone from an average of six months’ further delay to one of 15 months or more. The United States is a much better economy at recovering from recessions than the United Kingdom is. In the US, it takes on average four to five years for the economy to bounce back, but in the UK it takes eight to 10 years. There are therefore two strong reasons for examining why the UK is not as good at recovering employment as other countries are and why, even in those countries, it is becoming more difficult to associate growth with employment.

David Anderson: Interestingly, the OECD has the UK as the second worst country out of 36 in the developed world for employment rights—only the US is worse—yet the record shows that countries such as Germany, with much better employment rights, have come out of recession faster. Is that not the lesson we should be learning tonight?

Richard Fuller: I appreciate the intervention, but I am not as clear as the hon. Gentleman is about those particular statistics and I am not sure that they paint the correct picture for the United Kingdom. The shadow Secretary of State cited the World Bank earlier when he looked at the overall statistics on doing business and said that they had—surprisingly—got better under the previous Government. If we look at the same World Bank statistics and the issues to do with the labour markets, we find that this country declined from 17th to 34th position in the period from 2007 to 2010. In terms of the need for change in the labour markets, it has been shown that we need to get a little better.

Sandra Osborne: Will the hon. Gentleman give way?

Richard Fuller: Very briefly; I, like others, will not then use up more time.

Sandra Osborne: Statistics are extremely interesting, but what is the connection between what the hon. Gentleman is talking about and no-fault dismissal? Where is the evidence for that?

Richard Fuller: Many people look at the “dismissal” part of no-fault dismissal, whereas for Government Members and some Opposition Members the other part is how willing employers are to take someone on when they understand what the risks may be of having to hold on to them. That is the connection. My focus is not on the fear of what might happen in firing situations, which has rightly been expressed by Opposition Members, but on dead-weight costs and the number of people who have not been hired because employers are not prepared to take the risk with their businesses. All hon. Members and all businesses are concerned about achieving growth. To achieve growth, businesses need certainty, but equally they need to have certainty that any additional staff they hire will work out well. For a small businesses of three, four, five or 10 employees, hiring one person is an incredibly big decision. As my hon. Friend the Member for Stourbridge (Margot James) said about a business in her constituency, such costs have a significant impact on cash flow and perhaps viability.
	For those reasons, I hope that in Committee we can look again at the issues that Adrian Beecroft has raised, although I think the Secretary of State has dismissed them. I hope we do so by saying, “We aren’t yet sure what the right answer is, but we are not going to be put off by scaremongering tactics.” We need to understand whether such proposals will have an impact.
	Those are the main issues. If we are to achieve growth in our country’s economy, it must be founded on a better approach to getting people back to work quickly. We do not have the answers from our recovery from recessions of the recent past. I believe that making it easier for people to understand the risk involved when they hire people will be a major step forward in that regard.

Sandra Osborne: It is a pleasure to follow the hon. Member for Bedford (Richard Fuller), although I do not agree with him. I do not deny that there could be reform of, for example, the tribunal system, but no-fault dismissal is an attack on workers’ rights. That is not, as some say, a misunderstanding on the part of the public. My constituents know when their rights are under attack, especially when they are already worried about employment stability. The Secretary of State for Business, Innovation and Skills has ruled out proposals on no-fault dismissal in the Bill, and I hope that the Minister reaffirms that in his winding-up speech.
	I welcome the green investment bank, particularly as it will be based in Edinburgh. I am sure that my fellow Scots will have the good sense to realise that that and many other aspects are good reasons why we should remain part of the United Kingdom as opposed to being separate.
	Having said that, I shall try to keep my speech short and concentrate on clause 51, which is so important to the Secretary of State that he mentioned it only in response to an intervention from my hon. Friend the Member for Streatham (Mr Umunna). I do not agree with the Secretary of State; it is an important measure. It is not, as he said, just a tidying-up exercise.
	The clause removes powers from and reduces the duties of the Equality and Human Rights Commission, which was set up by the Equality Act 2006 as an independent statutory body and regulator. It is responsible for enforcing equality legislation on age, disability, gender, race, religion or belief, sexual orientation, or transgender status, and for encouraging compliance with the Human Rights Act 1998. It has a duty to challenge prejudice and disadvantage and promote the importance of human rights. It works to reduce inequality, eliminate discrimination and strengthen good relations between people.
	According to the Government, that apparently means that the EHRC is biased, which goes to show how shallow their grasp is of the serious, endemic problem of discrimination in our society, and how little commitment they have to tackling it. Perhaps that is why the Business Secretary did not bother to mention it apart from in response to an intervention.
	Undertaking those functions effectively requires proper funding and the retention of the EHRC’s full legal remit. We know that the Government have had it in for the EHRC for some time and have sought to undermine it, but that is not to say that there have not been problems. It is a new and innovative organisation, and to some extent such problems are to be expected. In my Westminster Hall debate only a few weeks ago, I highlighted the EHRC’s 62% budget cut and 72% cut to staffing by 2015 from the original 2007 level. The cuts to its resources and remit almost annihilate the commission, and render it little more than a talking shop.
	That is a great pity, because the establishment of the EHRC was groundbreaking. Legislation to outlaw discrimination has existed for more than 40 years, but, typically, new Acts have focused on one area of policy—for example, on pay, equal treatment of women or race discrimination. The body of law was introduced in a piecemeal way over a long period and developed inconsistencies. The 2006 Act harmonised existing law in a more coherent whole and introduced new requirements. It was subject to extensive pre-legislative scrutiny and had support from civil society and had all-party support. Having sat through the proceedings, I can say that the Liberal Democrats continually lectured the then Government on how the measures did not go far enough, and said how keen they were on the public sector equality duty, which is now up for review.
	Consensus was achieved on the introduction of the Act, but the Government’s so-called consultation on building a fairer Britain was a bit of a farce. They have ignored the majority of responses which, by their own admission, were against the changes they propose.
	The socio-economic duty is not currently in force, but its repeal is a political totem for the Conservative party, which has always opposed it. Everyone knows that socio-economic duties are not the Conservative party’s thing, but the Minister for Equalities, a Liberal Democrat, also took part in proceedings on the 2006 Act. At that time, she thought the socio-economic duty was so important that there should be separate legislation to deal with socio-economic issues. Will the Minister tell us when the Government will introduce such legislation?
	The Government want to repeal the general duty in the Act because they say it has no specific legal purpose and does not help to clarify the precise functions that the EHRC is required to carry out. Not surprisingly, many do not agree with that. It is a purpose clause that sets out the broad goals and underlying principles of
	the legislation. The Government have admitted that the majority of respondents to their consultation were opposed to repeal by nearly six to one, and were concerned about losing the guiding principles and values set out in the general duties as debated in the House during the passage of the Act.
	The Joint Committee on Human Rights at that time agreed with those principles, as did other hon. Members, including the then Member for Daventry, now Lord Boswell, who said:
	“I have no difficulty at all with the general duty in clause 3 —that is what most of us are in politics for.”—[Official Report, 21 November 2005; Vol. 439, c. 1331.]
	I know that to be true of him from the many contributions he made in this House, but it is not true of the coalition.
	The purpose clause on the socio-economic duty is about values. Crucially, it illustrates how our society views, and attaches importance to, matters of equality. It is a pity that the French experience will now be superior to ours. The French have adopted the duty in legislation but, unlike us, are not cutting back when it comes to carrying it out.
	I sat through proceedings on the 2006 Act. Hon. Members will have realised that I have strong feelings about these issues, so I shall cut my speech short. Clause 51 is not a tidying-up measure; it takes us backwards. It should not be supported and it should not be in the Bill in the first place.

Brian Binley: I congratulate the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) on a forceful defence of equalities. It was well received, and she should feel that she has done her job very well indeed.
	This is an important Bill, and I will concentrate not on equalities but on small and medium-sized businesses. They are where our growth will come from, which is why we have to prioritise them. Over the past decade we have failed to recognise the contribution that new and growing businesses make to our prosperity. It is small businesses that deliver employment growth. Private sector employment increased by 45,000 in the final quarter of last year to 23 million, the bulk of whom are in small businesses. They represent more than half the people employed in this country. As the public sector contracts to sustainable levels the private sector will grow, and small and medium-sized businesses will create the jobs that we need. They need help and impetus, and that is what I want to concentrate on today.
	The Secretary of State mentioned the situation in Germany, where very small businesses are well looked after because they are seen as the future oak forests of the German economy. They do not have to be on the trade register, they do not pay turnover tax, they do not specify turnover tax on their bills and they can calculate their profit for income tax purposes on the basis of revenue surplus. Additionally, they are not paid back the turnover tax that they pay to other businesses, and they are subject not to the rigid regulations of the commercial code but to the more protective regulations of the civil code. In other words, the Germans recognise the need to nurture their new and growing businesses. I am disappointed that we have not taken that route in the Bill, and I implore the Minister to consider that very seriously.
	Much has been said in the debate about regulatory reform, but small businesses have heard much of it before. Large multinationals have the resources to use expensive consultants and employ compliance departments, unlike almost every small business that I deal with. In commensurate terms, the burden placed upon small businesses is sometimes 30 times greater than that on a plc, yet we expect them to deal with the problems of employment tribunals, health and safety at work and human resources. They simply cannot do that and grow at the same time, and we need a Government who recognise that. I recognise some of the good that the previous Government did in this area, but they did not really understand that point. I fear that we will not understand it either, and I beg the Minister to consider it very seriously indeed.

David Anderson: Given what the hon. Gentleman has said, would it not be more sensible for the Government, instead of attacking employee rights, to give small business people access to such things as good-quality legal aid, so that they can take people on and exploit the system in the right way?

Brian Binley: I consider the hon. Gentleman to be a friend, and our views meet on a number of issues, particularly clean coal. However, they do not meet on this matter, because his suggestion would only add even more bureaucracy to small businesses. We need to lift that bureaucracy, and I ask that that point be appreciated.

David Simpson: I agree with 99.9% of what the hon. Gentleman is saying, especially about small and medium-sized businesses, which are the backbone of this United Kingdom. Does he agree that it is the Government’s role and responsibility to create the environment that will help those businesses to succeed?

Brian Binley: I agree entirely, and I am most grateful to the hon. Gentleman for making that point much more succinctly than I did.
	The Government recognise that employment regulation needs to be addressed. It is in everybody’s interests that workplace disputes are resolved as speedily as is practical. I share the concern of my colleagues on the Business, Innovation and Skills Committee that we must be assured that introducing a mandatory process will expedite matters. It is conceivable that ACAS will be involved in trying to conciliate more than 200,000 cases a year. Can the Minister provide an assurance that that will speed up the process?
	In response to the earlier consultation, the Government recognised the need to increase ACAS’s resources, arguing that that would be paid for by savings from cases that would not proceed to a tribunal. However, ACAS’s report makes it clear that three quarters of claims are already resolved before that phase. What further reduction do the Government envisage under the mandatory system, and will the additional resources be provided up front? Otherwise, if we are not careful there will be as big a road block as there is in the European Court of Human Rights in Strasbourg. I ask the Minister to consider that very carefully. ACAS acknowledges that
	“problems at work can be a barrier to growing a business”,
	and I support that view, but it has to be properly funded if it is to do the job that the Government will ask it to do. I am not sure that we have been assured that that will be the case.
	I welcome the provisions in the Bill to improve competition policy. Small businesses are capable of performing robustly in a competitive market, and we should ask whether we are doing enough to enable them to compete. When market forces fail to deliver a competitive environment, it is proper that authorities should intervene, but we need to make our competitions investigations speedier. Cartel investigations and dominance inquiries in this country take an average of more than 30 months, which is simply not good enough. We can imagine the cost involved for small businesses at the larger end of the scale that are involved in such process—it is enormous. All that we are doing is stopping good people managing their businesses for growth. We are making them defend their position simply because the law says they must. The law needs to be more helpful and understanding to them in that respect, and I ask that that matter be looked into more deeply.
	Finally, I welcome the extension of the primary authority scheme in clause 52. It is essential to widen small businesses’ opportunity to participate. The existing arrangements are too prohibitive, so the reform is positive. I pay tribute to the Labour party for introducing the scheme when they were in Government—I always want to recognise value where it exists, because the House is better when it works together than when it works apart.
	I repeat that this is an important Bill, and it has been brought forward at a sensitive time in the economic cycle. The voice of business could not be clearer. We need to create a simple, predictable, reliable and agile regulatory environment. We need to encourage entrepreneurs to start businesses and want to grow them here, and we need a competition regime that champions competitiveness and opportunity. Those are tough asks, and it remains to be seen whether the Bill will perform those tasks. It will if Ministers allow it to be amended effectively in Committee and on Report. I want an assurance from the Minister that the Government will be that understanding.

Austin Mitchell: It is always a pleasure to follow the hon. Member for Northampton South (Mr Binley), provided that one does not follow him too far down his idiosyncratic paths.
	It is difficult to speak about the Bill, as it is very much a rag-bag of a Bill. I would say it was a curate’s egg of a Bill, if we could assume that curates ate pterodactyl eggs that were good in parts but monstrous in others. It is a very mixed bag and it looks to me as though the Secretary of State for Business, Innovation and Skills, who is, I think, the only wise man in Government—certainly in the Cabinet—has had a difficult fight beating off some of the more lunatic proposals that were put to him by Beecroft and others in the Conservative party. He has finished up with not a Bill but a bric-a-brac stall, with several bits that are very broken and others that are very messy.
	We were told that the Bill is about growth—that it is about “encouraging long-term growth”—but that is completely crazy. Our economy is not growing because
	of the way in which the Government are handling it. They are obsessed with debt rather than the real problem with the British economy, which is demand. In an attempt to cut debt, they are cutting spending, firing public servants and reducing public spending, but those actions in turn are reducing demand with the result that we are acquiring more debt and that the burden of debt weighs more heavily on the shrinking economy. The economy was 4% below its GDP in 2008 and if we count the growth it should have had in the interim years, we can see that it is well below what it should be. Ours is the only economy in the world that has fallen that low, yet the Government are compounding the problem by trying to cut debt while widening the deficit, requiring more debt to pay the wages of misery and unemployment. That is an economic folly and what the Bill does to encourage growth is as nothing when set against that.
	It is a deceit to pretend that business is hung down with regulations, tribunals and employment regulations, that that is the cause of the problems and that if we get rid of all the regulations and obligations to the workers, we will suddenly have a surge of energy and enterprise. That is absolutely not true. Workers in this country have less protection and fewer rights than those in nearly every other advanced country apart from two. Less protection, fewer rights. We have heard some tear-jerking examples today of small businesses being unable to fire people. I accept that there are some problems, but it is easier for such businesses to fire people than it is in most comparable countries. When multinationals want to reduce their international work force, they notoriously always fire people in this country first because it is easier and less expensive in redundancy payments. No surge in employment will come through concessions to small businesses in the form of regulation. Speakers from the Government Benches have been rather like the captain of the Titanic, locked in his cabin discussing how to reduce the conditions and pay of the stewards while the ships sinks with an iceberg making a great hole in it. That is the level of the debate on those Benches.
	Let me look first at what the Bill does not do, because its inadequacies are more glaring than its adequacies. It offers a green investment bank—or, to give it its proper name, a pale green investment bank—that is not a bank and that is certainly too little, too late. It is much like the time when Michael Heseltine used to go around distressed towns in the north in the 1980s offering them a garden festival; the green investment bank is the Liberal party’s wreath from Government. What we really need is not a green investment bank with very little money at its disposal but a national investment bank that will raise money on the markets—it could use some of the proceeds from quantitative easing, too—and invest it in business, in housing projects and in infrastructure projects to get the economy moving.

Barry Sheerman: Will my hon. Friend give way?

Austin Mitchell: No, I want to be very brief.
	We are being offered a marginal increase in shareholder rights when what we need is an increase in worker rights and worker representation, particularly representation. Workers are the ones with the interests of the company
	at heart and they want to see the company maintained, viable and healthy. Workers, as well as shareholders, should be represented on the remuneration committee, on the audit committee, which should have a central role, and on works councils, such as those that they have in Germany. I would move rapidly towards the Mitbestimmung system of co-determination and partnership that they have in Germany. The Bill does not do that, which is a failure. It offers a simplified structure for competition issues when what we need is a British version of the Securities and Exchange Commission in the United States and a business commission to enforce effective corporate governance of British companies and to impose tougher rules on mergers and foreign takeovers.
	As Alex Brummer shows in his latest book, we have very few national champions left in this country and a higher proportion of our big firms have been taken over by foreign firms than in any other country. That means that they are dancing to a tune dictated from Zurich, Hamburg, Delaware or wherever else rather than to a British tune when making their investment decisions. We need to check and control foreign takeovers on that stage.
	Let me make a brief mention of what the Bill does; it has to be brief, because it does not do all that much. First, the simplification of the tribunal process is okay and acceptable, provided that ACAS gets the extra staffing and money that it will need to take over the conciliation process before industrial tribunal. Secondly, we need a one-track approach, rather than having to go first to ACAS and then to the tribunal. The approach should be integrated down one track.
	We need better protection and provision for whistleblowers. In many cases, that is the only way we will find out what is going on inside companies such as A4e—we heard all the revelations about what that company had been doing because they do not have an adequate audit structure or control structure. That means that fraud can be perpetrated at the lower levels, whereas the top management is not concerned and does not want to know what is going on. We need proper control structures and some system of strengthening and protecting whistleblowers to encourage them to come forward and reveal what kind of business practices are going on. If the Bill does not provide that, it will fail. Those are important provisions that must be implemented.

Barry Sheerman: Will my hon. Friend give way?

Austin Mitchell: No, I am finishing. The Bill is a rag- bag. I agree—

Lindsay Hoyle: Order.

David Evennett: I welcome the Bill and commend my right hon. Friend the Secretary of State for his opening speech. I was rather disappointed by the shadow Secretary of State’s lack of passion and belief in business. He seemed wedded to regulation and control and gave us rather a lawyer’s lecture. However, I enjoyed the passion in the speech made by my hon. Friend the Member for Northampton South (Mr Binley) and I congratulate him on that.
	Business, enterprise and enthusiasm are present across our country. Individuals and small and medium-sized businesses are willing and capable to take on the world and to succeed. I am sure that there is a real appetite to develop, promote and sell goods and services, not just to home demand but to Europe and beyond. All enterprises need help, however. They need the right economic conditions, the appropriate regulations, a trained and skilled work force, low taxation, a sympathetic and encouraging Government and, of course, hard work—together, I believe, with luck. We approach the Bill with those requirements and I am pleased that we have a Government who understand and support enterprise.
	There are 4.5 million small businesses in the UK, so any improvement we can make to the system of regulation and inspection will have a wide-ranging impact and could be of real benefit to the economy as well as to businesses. The most competitive and successful nations have clear strategies to support business. They have lighter regulation, less interference, competitive tax regimes, banks that support them and employment laws that make it easy to hire people. During the last decade, we have lagged behind in some areas as the previous Government seemed uninterested in business and more interested in the public sector. In the past two years, this Government have made real progress. Corporation tax has been cut and there is a greater number of apprenticeship places and more financial assistance to support work-based learning. The red tape challenge campaign was launched so that we listen to businesses’ concerns about regulation. A national loan guarantee scheme has been introduced so that businesses can get access to the credit that they need either to survive or to grow, and young entrepreneurs are being supported with start-up finance.
	Of course, much more needs to be done to help business, and the Bill will help dramatically with that. Regulations are a real problem, and over-regulation is a problem for small businesses particularly. According to research by the Federation of Small Businesses, 27% of businesses say that increased regulation created difficulties in expanding their business, and 33% said that regulation was the biggest potential obstacle to growth.
	I regularly visit businesses in my constituency that work in different sectors, including manufacture, retail, child care and education. Since the last election, I have been pleased to meet representatives of companies such as the Kenton Group, an innovative network research and manufacturing firm in Crayford; the Kip McGrath education centre in Bexleyheath, which provides extra learning support for children; and Pulp Friction in Erith, a growing firm of paper recyclers with depots across the country. Those firms are working hard to develop products and services that people want and need, and to generate wealth and prosperity. However, I remain concerned about the number of complaints that I regularly receive about the regulation and unnecessary bureaucracy that firms have to deal with and that take them away from more crucial tasks.

Barry Sheerman: The hon. Gentleman and I agree on many things when it comes to promoting enterprise. Does he agree that if he were in my region, he would have a very different perspective on how the economy was doing? Yorkshire and the northern and midland regions have been in recession for three years.

David Evennett: I appreciate the hon. Gentleman’s comments. We want to get the economy moving across the whole country, and make sure that there are jobs and opportunities. Training, enthusiasm and a determination to help small businesses is fundamental across the country, but I accept that different parts of the country have different problems.
	Another excellent firm in my constituency is Texcel Technology, an electronics firm involved in international projects. Its managing director, Peter Shawyer, recently told me:
	“The whole gambit of employment law causes us untold stress...Any dealings that affect employees are slow or impossible to implement without the threat of employment tribunals.”
	He also said that things are more difficult for smaller organisations that do not have a large human resources department with expertise from which they can benefit.
	Steps have already been taken on employment law reform. These include launching an employer’s charter, so that employers know what they can already do to address staff issues in the workplace. However, there is much more to be done, and I welcome the proposals, which will achieve many things.
	Small and medium-sized businesses will be able to benefit from reduced costs. Costs are a vital concern to SMEs. If the Government can provide a better way to agree settlements with employees, businesses can save money on administrative costs. More importantly, that will avoid costly employment tribunal processes, which can be a burden to businesses.

Eilidh Whiteford: One of the concerns that the Federation of Small Businesses raised about the conciliation proposals is that they may necessitate employers having to pay for more legal advice, not less.

David Evennett: I know, but I think and very much hope that the FSB is wrong on this. We need to look after both employers and employees, and get them working together, and I believe that the proposal is the way forward. Quicker resolution of employment disputes will be good for everybody, particularly employees.
	New arbitration requirements could prevent the need for tribunals. I welcome the clause that will provide for that, and the fact that ACAS will be involved. However, we need to make sure that both businesses and employees benefit and reach a satisfactory conclusion.
	There is another important aspect to this Bill: it will strengthen competitiveness. Effective competition is vital if markets and industries are to flourish. Through competition, research and innovation are enhanced, jobs are created and wealth is generated. It is also of great benefit to the consumer, who gets better choice, quality and price—something we all value. The Government’s plans will help to improve the regime that oversees competition law, ensure that the right cases are taken forward for investigation, and make the system quicker and more predictable for businesses. I support the proposal of merging the Competition Commission with the competition functions of the Office of Fair Trading to create a new body, the competition and markets authority. It will be the principal competition authority, and I hope that it will pursue cases of anti-competitive behaviour rigorously and fairly, so that consumers are protected and businesses are treated fairly. That is a very positive step.
	The CMA will have responsibility for introducing time limits on the markets and mergers regimes, speeding up anti-trust enforcement and ensuring good working relationships with other regulators. Overall, the new regime will improve transparency, streamline processes and increase efficiency. The measures will benefit businesses, consumers and the economy in the long term, so that markets are truly competitive.
	The regulatory reform aspects of the Bill are probably the most important parts of it, as they repeal regulations and legislation that businesses have said should be abolished. The Government are to be commended for listening to business, taking on board its views, and taking action to help create the conditions that will stimulate growth and bring about the economy that we want across the whole country.
	The primary authority scheme has helped to reduce administration for companies by allowing them to form relationships with a single local authority. The scheme makes local regulation more effective, and means that robust and consistent advice is given to other councils when they are carrying out inspections or compliance checks. The scheme has been running since 2009; it is one of the two positive things that the Labour Government did to help business. So far, it has delivered real benefits.
	To date, it has been larger businesses that have benefited from the arrangement. At present, a company has to operate in more than one local authority area to be eligible. The Bill will extend the scheme in an innovative and beneficial way, so that it supports more firms. Under the proposals, a business will now be eligible if it shares an approach to compliance with at least one other business and, collectively, those businesses are regulated by at least two different local authorities. That means that trade associations or franchises of the same company could benefit from this simpler and more effective regime.
	I applaud the Bill and all that it is trying to achieve. Of course we want to make a real difference for businesses across the country. We want to free small and medium-sized businesses from the burden of excess regulation. Employment rules will be reformed, so that the tribunal process is fair for all parties in any dispute; arbitration will be required first, and hopefully that will reduce costs. Markets will be reformed so that competition is fair and enforcement is effective. Regulations will also be removed where businesses have told us that they should cease, and where they are irrelevant.
	Good regulation must play a part in ensuring fairness for consumers, businesses and employees alike, but it is the Government’s duty to take action when those rules inhibit companies from taking on new staff. We desperately need new jobs, particularly for young people, and we want to make sure that firms are not prohibited from taking on young and new employees; that would help firms and individuals. I believe that the Bill will tackle those issues, create the right environment for our firms to grow, and stimulate our economy, which is in all our interests.

Julie Hilling: I want to speak about the proposed changes to employment legislation, an area in which I have many years of experience and in which I get increasingly frustrated by comments made
	by Government Members who either do not understand the limitations of current employment legislation or deliberately want to take us back to the days when mill and pit owners could treat their employees like slaves, work them till they dropped, and pay no regard to their health and well-being.
	The UK does not have wonderful employment rights; of the 36 richest countries, we come 34th. Only Canada and America are worse. That should not say to anyone that employment rights are holding back our growth. Indeed, we know only too well that when international companies want to close factories in Europe, they close a factory in Britain before they close one in France or Germany because of the cheapness and simplicity of making workers here redundant.

Mark Prisk: On that basis, how come it is a German GM factory, not a British one, that is closing?

Julie Hilling: The Minister gives one example, and we could collectively give many examples in which the opposite has happened—many examples over the years when it has been British factories that closed and French and German ones that stayed open.
	There is already an inequitable relationship between employer and employee. Before Government Members nod their heads in agreement, let me say that power is still firmly in the hands of the employer. Employers can do as they like as long as they follow simple and fair procedures. If an employer wants to dismiss a worker for misconduct, all they have to do is carry out a proper investigation, allow the employee representation and give them the right of appeal. As long as the employer has a reasonable belief that the employee has done something wrong, they can dismiss them.

Ian Lavery: Does my hon. Friend agree that it was Beecroft who suggested that it was fine to sack someone if the employer just disliked the employee, and that that was fair?

Julie Hilling: I agree with my hon. Friend that the Beecroft proposals are appalling as they relate to the rights and defence of individual workers. I shall say a little more about that in a moment.
	In order to dismiss somebody, the employer does not have to prove that the employee has done anything wrong. The employer just has to have a reasonable belief that it was them. As long the employer has followed a simple procedure and carried out a proper investigation, the employee has no case at a tribunal. The tribunal will not re-hear or re-judge the case and can find in favour of the employee only if the employer has not followed a fair process. If an employer wants to fire an employee for capability, all the employer has to do is tell them where they are failing and give them the opportunity to improve—again, a simple, fair process.
	The employee is not protected if they are disabled or sick. The courts have already said that the employer does not have to behave like a charity. If the employee is unable to fulfil their contract of employment, they can be dismissed. Yes, they may have a case for discrimination if the worker is singled out and treated differently from
	non-disabled workers, but if a fair procedure is followed and a reasonable adjustment is made if necessary, the worker can be dismissed.
	Let us not forget that an employer has two years to decide if an employee is suitable—two years to decide whether an employee is an asset to the company or not. Unless the employer is discriminating on the grounds of gender, race, sexuality and so on, the employee cannot go to a tribunal at all.
	I do not believe that we have thousands of bosses out there who want to dismiss workers with no just cause. Why would they, when it costs so much to recruit and train a new worker? Even if we do have rogue employers, they can already dismiss workers on a whim. All they have to do is pay them what a tribunal would give them—redundancy pay, and not even at the rate of the company scheme if it is better than the statutory scheme, any holiday pay and any notice period. The only extra sum that an employment tribunal will ever give is an award for future losses. That is not normally more than six months’ pay and the average is considerably less. To get that, the employee must prove that they were unfairly dismissed and show that they have been applying for jobs with no success.
	It sounds as though I am giving a lesson on how to be a bad boss. I am not; I am simply trying to point out how the employer already has massive power. I have lost count of the number of times I have had to use the trade union mantra, “Unfortunately the law is as it is, not as we would like it to be,” when I have had to give the news that an employee who had been dismissed had no case for a tribunal. Let me give the House some examples. A senior manager in the railways was charged with gross misconduct. We fought the charge and he was found not guilty. A month later the employer paid him off— 30 years of service down the drain, limited chances of another job and no chance of going to a tribunal.
	A travel centre worker with 17 years’ experience had no problems until her manager changed and she ended up off work with stress. She could not prove that her manager had bullied her, and because the employer followed proper processes, she was dismissed under capability procedure. A worker who had worked for the same company for 30 years was selected for redundancy on the basis of last in, first out—after 30 years—even though this is not allowed to be the sole criterion. His redundancy payment made it impossible for him to go to a tribunal. I could go on and on with examples.
	A great deal has been made of the cost to employers. They can get free legal advice from ACAS on all their policies and procedures. They do not need to employ a solicitor at a tribunal. As long as the employer has been fair and has not discriminated, they have nothing to fear. ACAS already offers mediation and I welcome the extension of that, but I believe that the proposed fees for tribunals are wrong and will act as a barrier to justice for those least able to pay. The judge can already make a deposit order of £1,000 to a claimant if the judge believes that there is no reasonable prospect of success at the tribunal.
	Let us imagine ourselves in a situation that far too many people find themselves in. They are sacked. They have no idea how they are going to meet their mortgage payments or put food on the table. Then they have to find money to take their case to court. The Government are just so wrong on this. They seem to have missed the
	point that many claims to tribunals are for very small sums—unpaid holiday pay, no notice pay, or wrongly calculated or no redundancy pay. Such simple cases are already heard by a judge sitting alone and are often worth less than the proposed fees.
	The Government are also wrong to dismantle our successful and admired tripartite industrial jury system of employment tribunals and employment appeals tribunals. As the Law Society has stated:
	“Lay members add to the concept of justice and they enhance the fairness of the tribunal by bringing practical experience in employee and employer relations.”
	As my hon. Friend the Member for Streatham (Mr Umunna) said, the Federation of Small Businesses is wholly against the proposals for compensated no-fault dismissal. It states that it has seen no evidence from countries where compensated no-fault dismissal is in place to demonstrate that it encourages employers to hire. In fact, it believes that it might lead to more employment tribunal cases on the grounds of discrimination, thereby producing exactly the opposite result to the main policy objective.
	The FSB also believes that there is a risk of creating a two-tier labour market and, specifically, that lower protection creates a risk that workers will not be attracted to small companies, making it harder for them to recruit. Those taking employment in small firms could be the lower skilled and less productive workers willing to accept lower protection and those finding it harder to access credit, such as mortgages. The FSB also believes that that would fundamentally change the dynamic relationship between workers and their employers and could deflect attention from the need for good management and replace it with a hire and fire culture. I could not agree more.
	The Government have stated that they must make changes to the tribunals system because of the rising number of tribunal cases, but the level of single claims, where individual workers make complaints about their treatment, has remained fairly steady—in fact, it fell by 15% between 2010 and 2011. Around 60,000 individual cases a year, of a work force of 26 million, does not seem all that excessive. Anyone listening to Government Members would believe that tribunals were a real cash cow for the employee, but the average award is £5,400 and the average cost to the employer is £8,500.
	I welcome the possibility that tribunals could impose financial penalties on employers who break the law. I have never understood why employers can break employment laws with impunity. The law is the law, it seems to me, and those who break it deliberately, especially if they do so regularly, should be punished. I am also concerned by all the statements we have heard from Government Members about health and safety and ask the Minister to assure us that no amendments will be made that relate to health and safety legislation.
	The economy is in recession not because workers have too many rights, but because the Government are cutting expenditure too far and too fast, hitting business confidence and choking off growth. Removing the rights of workers will only increase job insecurity, harm work force morale and productivity, and lower consumer confidence. This is not about making it easier to hire workers, but about making it easier to sack them. It is
	unwanted by responsible business people, unnecessary and yet another example of a Government who are out of touch and have no idea how to govern in the 21st century. It seems to me that they just want to take us back to the 19th century. With 2.7 million people unemployed and more than a million young people unemployed, the Government should simply get a grip.

Eric Ollerenshaw: It is a pleasure to follow the hon. Member for Bolton West (Julie Hilling), who chairs the all-party group on rail in the north, of which I am a member. I agree with her so much about rail investment but, with regard to the particular points she has made, I do not believe that the Government are leading us back to the 19th century and will say something about that in a minute.
	I will begin by talking about the aspects of the Bill on which people agree. I am pleased that most Members agree that the establishment of the green investment bank is a good thing and, like other Members, look forward to a time when it can lever in private sector investment. However, I would have preferred us to open up the location of the bank and suggest that it could have gone to a greener area, perhaps in the north of England, and perhaps to some small, historic town such as Lancaster, but I accept that it was a Government decision and will not be reopened.
	I welcome the Bill’s enabling powers giving shareholders greater control over the pay of their company directors. Given recent trends, it is right that those powers should be considered. I also welcome the measures to cut bureaucracy and red tape. For as long as I can remember, Governments have talked about cutting red tape but it rarely happens in practice. In stark contrast, the Government have already introduced a one-in, one-out rule for regulation. The notable exception is my right hon. Friend the Secretary of State for Communities and Local Government, who has gone for twice as much by introducing a rule in his Department whereby two pieces of legislation must be scrapped for every new measure brought in, which I think should be the gold standard we aim for.
	The Bill moves forward the cause of smaller government and a freer business environment, with sunset clauses on new regulations, a reduction in various inspection regimes and the repeal of many regulations that have been deemed unnecessary. I am sure that many more will be identified over the coming months and sincerely hope that the battle against regulation continues throughout this Parliament. This Bill is just a start.
	I have referred to my disagreements with the hon. Member for Bolton West and others, and what I really want to deal with is employment tribunals, directing my remarks at the clauses that deal with employment and workplace disputes. Other Government Members, such as my hon. Friend the Member for Northampton South (Mr Binley), are passionate about the issue, and we all agree that small businesses and, below them, micro-businesses are the lifeblood of this country and where real growth will come from. Cuts in the rate of corporation tax may help to attract big business to invest in the UK and are welcome, but, if we want more small businesses to start up and to succeed we need to make it easier for them to employ people and to manage their staff effectively.
	Opposition Members do not understand the issue, as was shown by the hon. Member for Bolton West when she talked about paying, because in a micro-business the boss is the HR department, the sales person, the production manager and the health and safety officer.
	That issue has been raised with me, and I have one, real example to back up what my hon. Friend the Member for Stourbridge (Margot James) said. An employer wrote to me, saying:
	“Employing people is the hardest thing I’ve ever done in my life, by some considerable distance.”
	He already had investments in various houses, and he went on to buy a small café, with the hope of establishing it and building it up. He employed two full timers and, for mainly busier days and to cope at weekends, a few more part-time staff, but he was forced to make some redundant when financial circumstances took a downward turn, so he naturally kept on those employees whom he found best at their job, who had a good attitude and who were flexible.
	One employee who lost their job threatened to take my constituent to a tribunal, however, on the grounds of age and sex discrimination, later adding religious discrimination, too, unless they were paid £1,200. The hon. Member for Bolton West may think that the employer should have just paid up, but, for the owner of a micro-business—a café—with a couple of employees, £1,200 would have meant his profits gone for a few weeks.
	A meeting was therefore convened, but the decision remained the same, in support of the employer, so the ex-employee went to a tribunal, the stage at which my constituent feels the whole system is organised against employers. He had no recourse to free legal advice, but his ex-employee found immediate help from Citizens Advice and, subsequently, a pro bono barrister. My constituent had to defend himself because he could not afford legal assistance.
	The ex-employee’s claim went up from £1,200 to £4,500 and, by the time it was heard at the tribunal, had increased by almost tenfold to £10,000, partly because the NHS had advised that legal action be taken against my constituent for injury to feelings.
	I find that part of the story strange, because I can fully understand an NHS therapist confirming in writing that someone’s health had suffered as a result of losing their job, but I do not see why or how they should advise people to take their employer to court.
	The case went on for 11 months, with my constituent representing himself while trying to run his café and organise it during a downturn. Eventually the tribunal found in his favour, concluding that the employee was sacked for financial and flexibility reasons, as well as for performance and attitude issues.
	The case finally came to an end, but my constituent was out of pocket, having had to appear by himself at all tribunal hearings, and I am sorry to say that he has now decided to sell his business. He never wants to go through such a battle again, and he has made it clear that, if people ask him for advice on setting up their own business, he will tell them not to bother as it is not worth the stress, strain and hassle. That is not only sad for him and for other businesses, but bad for the local economy and for local people looking for work, because as business picked up I am sure that my constituent would have ratcheted up his part-time work force.
	We need to ensure that such scenarios do not damage businesses. I do not know what Labour Members get in their post, but people from micro and small businesses continually repeat to me their experiences of the problem of employment. As my hon. Friend the Member for Bedford (Richard Fuller) made clear, we are not talking about attempting to allow employers to sack more but giving them the confidence to hire more and take people out of unemployment. I gave the example that I did because of its particular nature. The sad fact is that that business is now lost to my town because of the inflexibility of the tribunal system.
	I commend what Front Benchers are trying to do in improving the situation, and I look to further improvements when the Bill goes into Committee. We need to get employment up and give employers the confidence to take people on. At the end of the day, a micro-business owner wants their employees to do well because it is their business; he or she is working alongside them. It is not some great game. Unfortunately, because of current regulations, the situation has become inequitable and costly for employers, who are doing what my constituent has done and refusing to take on more staff, which is bad for all of us.

Several hon. Members: rose —

Lindsay Hoyle: Before I call the next speaker, I am going to drop the time limit to seven minutes. It is only fair that the Members who have been sitting here get a chance to speak. If anybody is upset, please remember that the Front Benchers took up a lot of time at the beginning.

David Anderson: Like everybody else in this Chamber, I represent a diverse community that is not just based on big businesses or the public sector but has very many small businesses. The issues that people from those businesses raise with me are not about employment rights but whether the banks are going to start lending some money so that they can afford to expand and take more people into the workplace.
	My problem with the Bill as regards employment rights is that it is not based on evidence or need, or on great demand from the people of this country; rather, it is based on prejudice, opinion, conjecture and bias. It builds on the attacks that the workers of this country have already been suffering under the guise of deficit reduction. We have had mass unemployment, pay freezes, reductions in pension entitlements, and people being made to work longer for fewer benefits. Now, as a result of the Downing street double-dip recession, we are seeing another front opening up in the attacks on workers at home and at work. This is a hugely important matter for the people of this country, because these proposals will be seen by some employers—not all—as a right to exploit their employees.
	None of this is new. The Conservatives have never supported positive rights for working people; they have spent the last two centuries attacking and undermining them. Even in the recent past, they were against the national minimum wage and, as we heard earlier, protections for agency workers. They were against the right to paid and increased holidays. Now, most of those rights that have been won for the most vulnerable and the worst-organised sectors of our society are under threat. On
	the last day before the recess, we saw the disgraceful slipping out of the information that the gangmasters legislation is to be watered down. What an atrocious thing to do; people must have no memory or no respect. These are basic rights in civilised nations, and they should be celebrated, not denigrated.
	The Conservatives have shown their true colours with an anti-worker, anti-trade union agenda disguised as a means of promoting growth. I would say that, wouldn’t I? I have been a trade unionist for 44 years, and I admit to being biased, but it is not just me who is saying it. Listen to Mike Emmett of the Chartered Institute of Personnel and Development:
	“If the Government is serious about stimulating economic growth, it will look to support employers’ efforts to build an engaged workforce. Taking away employment rights is not the answer.”
	There is disagreement even within, although not at the heart of, Government. On 21 May, the Business Secretary said in The Sun:
	“Some people think that if labour rights were stripped down to the most basic minimum, employers would start hiring and the economy would soar again. This is complete nonsense. British workers are an asset, not just a cost for company bosses. That is why I am opposed to the ideological zealots who want to encourage British firms to fire at will.”
	So who wants it apart from the zealots in No. 10 and No. 11 Downing street? Well, Adrian Beecroft wants it—the man who gave the Tories half a million pounds. Give him his due: at least he is honest. He said:
	“Some people would be dismissed simply because their employer did not like them. While this is sad…it is a price worth paying”.
	Now where have we heard that before?

Ian Lavery: Does my hon. Friend share my experience of never having met an employer who believes that this Bill will be of any benefit to employees or to the economy as a whole?

David Anderson: It is clear from our discussions that nobody who represents employees believes that the Bill will improve growth. As was said earlier, the OECD has said that even though we have some of the weakest employment rights in the developed world, countries with more stringent rights are performing much better than we are. It is quite clear that it does not work.
	Beecroft said that the consequences are a “price worth paying”, which of course is what the Prime Minister’s former boss, Norman Lamont, said in 1992—the last time there were 3 million people on the dole in this country. We have seen the truth. The Conservatives believe that mass unemployment is a tool of public policy. They believe that bosses should be able to fire people just because they do not like them. They believe that it is in the national interest for the work force to have to accept poor pay and insecurity at work, and to be made to work without the right to complain.
	The legislation will be used to get rid of union representatives. It will be used to dilute the impact of health and safety representatives. It will be used to get rid of those who question authority. It will protect and promote the blue-eyed boys and girls who put up with anything without complaint and who do exactly what the boss wants, regardless of the consequences.
	This is like a rerun of “Back to the Future”. The Secretary of State is Doc Brown, the well-meaning but hapless boffin. The Chancellor is Biff the bully, who will not let anyone get in his way. The workers of this country are playing Marty McFly, the poor guy who has to run to stand still, while all around him everything he has ever done is disappearing before his very eyes. Unfortunately, this is not “Back to the Future”, because that, as people know, had a happy ending.
	A happy ending is possible only if one of the following things happens. First, the Government could see the error of their ways and pull back from these callous and calculated attacks on working men and women. Secondly, the yellow human shields of the Liberal Democrats in this House could finally get some bottle and give their Secretary of State the backbone to stand up for what he believes in. Having seen the attendance of the Liberal Democrats tonight, I guess that that is not going to happen. Thirdly, if the Bill goes through and workers’ rights are attacked, those on the Labour Front Bench must commit unequivocally to repeal the legislation at the first opportunity when we return to government. Anything less will be seen as a betrayal of the workers of this country and will not be easily forgiven or forgotten.
	We should be focusing in this debate on how we can support businesses to hire more workers, not on how we can legislate to help the rotten ones to fire workers. This pathetic Bill says more about the nature of today’s Government than almost anything else that they have done and it must be resisted both inside and outside this House.

Julian Smith: I will restrict my comments to the regulatory aspects of the Bill.
	The Government were left a regulatory nightmare by the Labour Government. The last Government introduced six regulations a day, the CBI estimates that employment law alone has cost British business £100 billion since 1998, and 107 of the 152 employment regulations on the statute book were added under the Labour Government. Better regulation attempts came and went under Labour. Regulation tsars reporting to the Prime Minister were placed at the top table for about 10 minutes and then quickly dropped. In the good years, Labour not only lost control of our budgets, but added piles upon piles of new rules and red tape on British business and the public sector.
	Regulation has a vital role to play in a market economy, but it also imposes costs that can stifle innovation, present barriers to market entrants and deter economic activity, as we have heard in numerous examples tonight. I do not understand the evidence given by the shadow Secretary of State. A recent MORI poll for Capital One’s report, “The ties that bind?”, confirmed that regulation tops the list of issues facing very small businesses, with 64% of micro-businesses believing that the regulatory burdens that they face are far too high.
	The Government have done a lot on this issue: they have set up the independent advisory committee on regulatory reform; they are publishing quarterly regulatory statements; there has been the red tape challenge, which is now part of the Bill; there is the ongoing employment law review; and the one-in, one-out process is firmly under way and is holding each Department to account.
	The Government have done much more serious work on regulation over the past two years than Labour did in 13. This Bill is part of that good work.
	Since 2010, the Government have introduced a number of measures to simplify the employment environment, raising the qualifying period for unfair dismissal from one year to two, reducing the risk of vexatious tribunal claims, and introducing fees for those wishing to pursue a tribunal claim. As we have heard, being taken to a tribunal is one of the biggest fears of our smallest employers. The main change—introducing mandatory pre-claim conciliation—will help. Indeed, the Forum of Private Business has already said that 70% of its members believe that more conciliation is a positive step in avoiding cases escalating. Such an approach is also good value for money—ACAS has had a 75% success rate in the discretionary conciliation cases it has dealt with—and will save businesses the cost of defending themselves, which comes to £4,000 on average.
	However, I have a few observations. If we are to give ACAS this further power, does it have the resources for it? That issue came up in the consultation. Also, do we need to restrict mediation to ACAS? Can we not include private and other providers to help in mediation? I would be interested to hear the Minister’s comments about that. ACAS also has to secure permission from the employee to contact the employer during the conciliation process. We need to give the mediator absolute access to both the employee and the employer, so that it can properly conduct the mediation process. We also need to ensure that the mediation process is as informal as possible, so that the employer does not have to get tooled up with expensive lawyers, which is an issue that the Federation of Small Businesses has raised. I am concerned about the proposals for fines because, as the CBI has argued, tribunals are a form of grievance resolution, not a criminal court. If we are going to have fines, there needs to be some sort of exemption based on company size.
	However, let me get back to the positives. The change to unfair dismissal compensation is a good move. It will mean that companies of different sizes should be able to get different awards, which is much fairer for the very smallest businesses in our country. On unfair dismissal, I pay tribute to the Minister, because with these compromise statements he has got the key to exactly what businesses want. I think they will be known as “Lamb statements”, because they will make business much easier for our smallest employees and will make compromise agreements—which have previously been accessible only to very well-off companies—accessible to our smallest firms.
	Let me turn to regulation more generally. There have already been some good moves, which I outlined earlier. The sunset clauses in the Bill, the relaxation of inspections, the red tape challenge and the primary authority changes are all good moves too. However, I urge the Government to be a bit more ambitious. May I urge Ministers to look at the one-in, one-out rule sector by sector, and segment of law by segment of law? Can we include European directives as soon as possible? Can we also take a hard look at the infrastructure of our regulatory reform? If we look at what the Americans are doing with OIRA—the office of information and regulatory affairs—we see the disparate construction of our different deregulatory bodies, with the Better Regulation Executive in BIS, the local regulatory offices and various other
	groups. We should be trying to bring things together, as the Americans are doing, so that we can make a serious attempt at reducing regulation in future.
	A lot has been done, but we need even more ambition. I urge Ministers at all times to listen to the voice of business, particularly those not represented by business organisations, which at the moment are crying out for the freedom just to get on with their jobs.

Mark Durkan: As a Member who is due to give evidence to the commission on the West Lothian question later this week, I am particularly conscious of the fact that this Bill is something of a chequerboard in terms of its territorial application. One of the key elements that obviously applies UK-wide is the green investment bank. I welcome the moves to develop the green investment bank, but I regret the fact that, as the amendment states, it is not as well resourced as it might be. The Bill does not give me cause to believe that it will be as active a driver and supporter of the green economy in the long term as it should be.
	My more particular concern is to ensure that when the Bill is processed through the House, the provisions relating to the green investment bank are tested to ensure that the references to the green economy in the UK are not inordinately exclusive in regard to Northern Ireland. Many of the projects there that might seek support from the green investment bank could have a cross-border, cross-jurisdictional character. In offshore wind projects, for example, the geography and topography of natural resources and renewable energy point to it being sensible for those projects to cross borders. The present renewables obligation certificates regime discriminates against and excludes cross-border projects, and we need to ensure that that mistake is not repeated with the green investment bank if we are to maximise its opportunities.
	Similarly, a large number of the provisions on competition and markets are UK-wide, and I want to see some aspects of them teased out—and possibly ironed out—not least in relation to their possible application in Northern Ireland. Among those measures is the proposal to take the consumer education role of the Office of Fair Trading and give it to Citizens Advice. Given that the citizens advice service in Northern Ireland operates on a different statutory footing from the one in England, we must ensure that there are no oversights and no inadvertent black holes in relation to that key issue.
	The provisions on employment law will clearly apply to Great Britain, but the reality is that changes of that nature are likely to become predictive legislation for Northern Ireland. They set the conditions in many ways, which is why I join my hon. Friends in expressing my profound reservations and objections to some of those unnecessary changes. Given that the Prime Minister seems reluctant to dismiss anyone even when there are compelling reasons to do so, I find it strange that he wants to make it his business to ensure that other people can be fired without any compelling reason whatever.
	There is one element that I would have liked to see in the Bill. On this, I disagree with my hon. Friend the Member for Great Grimsby (Austin Mitchell). He called it a “ragbag” of a Bill, but I am asking for a further
	element to be added. I note that part 3 of schedule 17 contains a small amendment to the Insolvency Act 1986 in relation to early discharge from bankruptcy. It refers to section 279 of the Act, but I believe that the Government should use the Bill to reform section 233. I asked the Minister about this at topical questions: on the subject of administration costs, businesses that are in administration are being held to ransom and put out of business by suppliers.
	As it stands, the Insolvency Act fails to give businesses here the same kind of protection that is provided by chapter 11 in the United States. Under chapter 11, suppliers have to continue to supply a business under the existing terms. Here, suppliers are asked to continue to provide, but there is nothing to prevent them from changing their terms. Many demand increased tariffs and ransom payments, and many cut off supplies and create a new contract. Businesses in that situation find it very hard to cope. They also find it hard to persuade the banks to support them through their administration, at a time when they are vulnerable to being held to ransom by such predatory action by suppliers.
	When the Insolvency Act was passed in 1986, the concept of on-suppliers—people with whom firms have a contract to supply, but who are sourcing the supply from others in areas such as telephony and electricity—was not clearly provided for. Some of the subsequent court decisions seem to be adding to the confusion. The professional trade body dealing with insolvency, R3, believes that this needs to be dealt with, and that up to 2,000 firms a year could be saved if a legal change of this nature could be made, allowing them to be protected and to trade in administration. Jobs would be saved, as well as firms, if we changed the legislation in that way. It would not be a regulatory change getting in the way of good business; it would be a regulatory reform that supported businesses in the difficult circumstances in which they find themselves, and it would allow them to continue. If one part of the Insolvency Act can be amended through the Bill, I see no reason why this even more compelling case for reform should not be included.
	The Minister’s predecessor stated last October that the Government had announced that they would consider the case for updating section 233 of the Insolvency Act and the wider issue of termination clauses. I would say that the case is compelling, and it is supported not only by R3, the professional body dealing with insolvency, but by the Federation of Small Businesses, the British Chambers of Commerce, the Association of British Insurers and the British Property Federation. Let us have this much-needed reform, not the specious and unnecessary changes that the Bill provides for elsewhere.

Several hon. Members: rose—

Lindsay Hoyle: A number of Members wish to contribute, so I shall lower the limit to six minutes.

Priti Patel: I welcome this Bill, particularly the Government’s commitment to cut the cost of regulations in order to support business growth. I say that as someone who spent 30 years growing up
	literally on top of small businesses, as that is what my family did. There is so much to commend in the Bill. We have heard from right hon. and hon. Members this evening who have focused on regulation. I think that Ministers should be commended for all their efforts, however, as they have demonstrated their desire to keep Britain open for business by keeping tax, particularly corporation tax, low. That applies to small profits rates, too, which were due to increase under Labour. These welcome steps are in complete contrast to what Labour proposed.
	I shall focus my remarks on regulation, even though it has been touched on already. I believe that using fiscal levers and taxation policy alone to stimulate private sector economic growth and to encourage entrepreneurship can go only so far. Lower taxes, for example, must be complemented by a significant reduction in the costs and burdens imposed by regulation. That is why this legislation is not only welcome but urgently needed.
	Business men and entrepreneurs, particularly small businesses, do not want to spend their time, often late into the night, filling in forms, ticking boxes and dealing with bureaucracy, regulation and red tape. That takes a disproportionate amount of their time when they could be running their businesses. They want to be able to take risks, grow their businesses and create jobs rather than be swamped in bureaucracy and red tape. I think that the proliferation of red tape over recent years is a damning indictment of the last Government’s record in office and their failure to support businesses. The regulatory framework they left behind has been deeply damaging to the growth of our economy.
	The Forum of Private Business has estimated the cost of compliance with regulations at something like £16.8 billion, with the average cost per business totalling around £14,000. These are astonishing figures when we think that the annual cost of compliance is equivalent to the amount spent on Crossrail or 11 times the total Government budget for apprenticeships alone. These are deeply alarming figures. If even a modest amount of those costs could be removed, Britain’s 4.5 million small businesses would be more competitive internationally, able to reduce costs for their customers and to expand to create more jobs and growth domestically.
	We have heard much this evening about regulations in the sphere of employment law, with 107 new employment regulations added since 1998. The consequences are clear to anyone who has had any experience of small businesses. I hosted the reception for the FSB earlier this evening; it has stressed the disproportionate impact of these regulations, seriously affecting such businesses.
	There is no doubt that businesses large and small will welcome clause 49 and the introduction of sunset and review clauses into regulation. Those measures build on “Sunsetting Regulations: Guidance”, published by the Government in December, which recommended that regulations which impose burdens on businesses be reviewed more frequently—within five years—and should expire within seven years. That is important, because the cost of regulations can spiral, and they can have a disproportionate effect. However, I urge the Government to ensure that those regular reviews of regulations not only take place but lead to changes when the burdens imposed on business are too great. Ministers have an opportunity to focus on what is working and what is not. We have already heard about one in, one out. My
	preference would be for no regulations in and a lot of regulations out, and the same applies to Europe, but at this stage Ministers need to focus more on what needs to be scrapped in order to free up businesses.
	In the brief time available to me, I want to touch on the international dimension of enterprise and regulation. Last month I had the privilege of visiting London Gateway, which is an expanding part of the county of Essex. As an Essex MP, I am proud to represent the entrepreneurial spirit that can be seen there. There is a colossal amount of entrepreneurship in Essex, and London Gateway is a very good example of a selling point for UK plc. In the face of many regulatory hurdles, foreign direct investment in the UK has helped to develop the site into an incredible new port and logistics park which will create a great many jobs and boost our economy, just on the cusp of London. I think that Ministers could learn from some of the challenges that have been met there, and could find ways of bringing more foreign direct investment to the UK and showcasing it, and London, internationally. The selling point would be the removal of many of the regulatory burdens that we have seen in the past, but with which the Government are now dealing.
	I urge the Government to press ahead with the Bill, and to embark on a radical programme of deregulation and regulatory reform. That would encourage more businesses like DP World, and even Tata and Glaxo, to follow in their investment footsteps, and to create more jobs and economic growth in this country.

Kate Green: Clause 51 seeks to repeal a number of provisions in the Equality Act 2006. I am puzzled by the clause, because most of the provisions that it seeks to repeal have nothing to do with the regulatory burden on business. As was pointed out by my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne), in repealing the good relations and general duty provisions that currently apply to the Commission for Equality and Human Rights, we will make no difference to business directly, but will change the context and undermine the equalities philosophy which I believe is important for a successful economic recovery. I shall say more about that in a moment.
	Elsewhere, through changes in regulations, the Government are directly attacking some of the principles that protect employees and guarantee labour market equality. They are consulting on proposals that have resulted from the red tape challenge: proposals to remove employer responsibility for third-party harassment, to ensure that decisions by employment tribunals will no longer apply to all employees, and to remove the use of the statutory questionnaire. When I asked the Secretary of State about those proposals earlier this evening, he seemed to say categorically that none of them would appear in the Bill. We will hold him to that, because watering down equalities legislation is certainly not a recipe for economic growth. On the contrary, labour market justice and fair access for all to employment opportunities are a prerequisite, not a problem, for economic success. An unequal recovery which fails to make the most of everyone’s talents and take steps that encourage and support employee loyalty, and which therefore fails to stimulate productivity, is no recovery at all.
	I am sorry that the Government have missed an opportunity to link—proactively, ambitiously and imaginatively—labour market justice with economic success in an explicit way. The Bill could have included measures to improve employment opportunity and labour market justice. Measures that tackle occupational segregation and introduce the anonymising of application processes have been shown to improve access to the labour market, yet there is no sign of any such provisions. The Government also have a social mobility strategy that they are supposed to be promoting, but that, too, is in no way reflected here, or even mentioned.
	The Bill presents an opportunity to create the conditions for an equal, not an unequal, recovery—a recovery that promotes, supports and makes use of the talents and contributions of all. I regret that the Secretary of State has thus far failed to take that opportunity, but he still has time to correct the omission. I say to the Government that if Ministers do not bring forward amendments to create the genuine conditions for economic recovery and equal opportunity in the labour market during the passage of the Bill, we most certainly will.

Neil Carmichael: It is a great honour to be called to speak in this important debate, and I am pleased to follow the hon. Member for Stretford and Urmston (Kate Green).
	First, I want to make two general points. If we were relying merely on passing legislation to promote economic growth, we would have had a lot of economic growth already, because the truth of the matter is that legislation is aplenty. What matters, however, is what that legislation actually does, and this Bill will empower businesses to get on and do what they need to do, which is employ people and be innovative. My first general point, therefore, is that we need legislation that trusts business to get on with the job of generating economic growth.
	My second general point is that we must not see this Bill in isolation from other Bills, such as the draft energy Bill, which will pave the way for new market developments, new technologies and new ways of providing energy. We need joined-up government. Indeed, economic policy is all about joined-up government, such as linking what this Bill paves the way for with other important pieces of legislation.
	Let me illustrate that by talking about the green investment bank. I serve on the Environmental Audit Committee, and we produced a thorough report on the bank. We made three points, which I shall go through now as they are important both in respect of this Bill and for our future prospects of developing an economy that is both CO2- effective and economically productive.
	The Bill must ensure that the green investment bank thinks about small and medium-sized businesses. We must have legislation that salutes SMEs in the technology and energy production sectors and recognises their value. They are the businesses that will come up with the good new ideas that translate into development. That is certainly happening in my constituency, and I expect it to happen in others. This Bill needs to help bring that about. The first point, therefore, is that we must be sure that SMEs can benefit from the green investment bank.
	The second point is that it has to be a bank, not a fund. If it were a fund, we would be using the regional development funds and whatever else might be at our
	disposal. We need a bank that knows what it can do in terms of both attracting other investment and investing itself and levering in additional money. It must have clout in the market. That is essential, because if it is to be a bank, it must look like a bank and feel like a bank, and people must think it is a bank. I acknowledge the constraints imposed by the deficit reduction programme and so on, and I have said several times in the House that we must reduce the deficit, but we must also signal that the green investment bank will be significant—a powerhouse of support for innovation, development and everything else.

Ian Lavery: At this point, does the hon. Gentleman believe that the green investment bank is a bank or a fund?

Neil Carmichael: It is called a green investment bank and that is what I shall call it, but I accept the need for us to ensure, in the shortest possible time, that it is a real bank and not just a fund. The fund is big, though— £3 billion—and we should bear that in mind.
	The third important point about the green investment bank is the quality of its expertise. That will be vital in a bank that is dealing with the sort of technology for which its support will be sought. The Minister must recognise that the green investment bank has to be shaped in such a way that likely investors, borrowers and businesses that approach that bank will feel comfortable with the expertise it has and that, in turn, the bank can deliver that expertise to the firms. If we look at the banking system across the European Union, we can see that where institutions have that expertise—the European Investment Bank is a good example—it works. We have to build those critical elements into the legislation, so that the green investment bank packs a punch in terms of investment, expertise and small businesses.

Geraint Davies: I think the Bill is not just a lost opportunity but a thinly veiled attack on workers’ rights. It pretends to be about growth, but contains no real growth strategy. In Britain and across Europe, the big political issue is growth versus cuts to get down the deficit and balance the books, but we are seeing that austerity literally is not working. On Sunday, the Greeks will hold another election, but what are they being offered? Cuts in their pensions, their salaries and their jobs—further poverty. On the plus side, why are they not being offered investment in solar forests across Greece, to provide energy for Europe; in railways, to connect up the tourism business; in universal broadband, to connect them to the world; or in a share of research and innovation? Where is the balance? It is not working.
	In south Wales, the area I represent as a Swansea MP, we want electrification of the railway to Swansea, a lowering of the bridge tolls and cities working together in city regions—an initiative I am pushing forward locally. We want a fiscal stimulus like the one seen under Brown and Obama, when what could have been a world depression ended up becoming fragile growth. Now, we have zero growth thanks to the Chancellor suddenly announcing that he was going to sack 500,000 public sector workers—Bob’s your uncle, people stopped spending
	their money, growth came to a standstill and the deficit is £156 billion higher than previously forecast. Austerity simply is not working.
	I welcome the green investment bank and the £3 billion fund, but I think what we really need to do is refocus our procurement on green companies and SMEs generally to generate the jobs and production needed to support public services. As I mentioned earlier, in Wales, 70% of procurement is spent through SMEs, 50% of which are based in Wales, whereas in England the figure is 7%. The Government spend 93% of the taxpayers’ money with great big companies—normally international companies that generate jobs abroad and do not pay tax here. It is completely crazy. We should be using our procurement facilities to generate green jobs, in particular in SMEs, but the Government simply are not doing that.
	What about the devolution debate—devolving tax powers to Wales and Scotland? I am highly sceptical about that. At a time when, across Europe, we are seeing a monetary union that increasingly requires fiscal and political union to work, we are being urged to devolve borrowing and tax to the regions and nations of the United Kingdom. Obviously, the political trick here is to say to Wales, “You can borrow. You can tax. If you want some more spending, raise your own money from a weaker tax base.” We can see where that is going and I do not think that people will be fooled.
	Beecroft’s proposals are the hidden agenda. The Business Secretary says that they are a load of rubbish, but we can see a diluted version of them coming through. It is basically a charter for intimidation and harassment. As I said earlier, if a female employee says no to a boss who asks, “Will you sleep with me?”, the next thing that is going to happen is that she will lose her job. It may be a bit more subtle than that, but that is the sort of pressure that we are seeing through a re-invention of Dickensian Britain and a forthcoming Dickensian workhouse. This is retrograde, unnecessary and completely contrary to where Britain should be going.
	Regional pay is another attempt, certainly in Wales, to reduce pay. It is to be reduced by about 20%, at a time when 40% of workers in my constituency are in the public sector. They are seeing their jobs cut, their pensions cut and their pay frozen, and now the Tories in England are saying, “We’ve got a good idea. We’ll cut your pay by 20% and completely take the base out of the local economy.” This is completely ridiculous. It would mean that a GP from Swansea would be paid more if they were in Bristol. We want to attract inward investment from people who want decent schools, decent health services and all the rest. Are they going to come to a place where the Tories have denuded that in the name of regional pay? Aa time when the local authority offers 10 apprenticeships and gets 800 applications, there is no shortage of people wanting to work.
	This Bill is a mean-minded, pathetic and unambitious bit of nonsense. Nye Bevan pointed out that, in times of great economic difficulty, there is dynamic struggle between private property, equality and democracy, and ultimately the Tories will attack democracy in order to load the burden of the mistakes of the rich people—the bankers—on to the backs of the poor. What we are seeing in Wales is not only the reduction from 40 to 30 MPs, and not just individuals now not required to register to vote and not just the latest attempt to say to the Welsh Assembly Government, “You will never have a majority Government again, because 30 will be
	elected by first past the post and 30 by regional list”; this is all part of a carefully choreographed situation where poorer people will have fewer MPs and will vote less, particularly in places such as Wales, in order to keep a Tory Administration nationally. This goes back in time to the orthodox austerity, and making the poor poorer and giving back to the rich on the 50p tax rate. This stinks, and it does nothing for growth. We have a Prime Minister who preaches growth while he is in Europe but practises austerity at home. This is a mean bit of legislation and it is a lost opportunity. At a time when the global spotlight is on Britain with the Olympics, we should be ashamed of ourselves.

Katy Clark: Time restraints mean that I will keep my contribution brief, Mr Deputy Speaker, and address only one aspect of this wide-ranging Bill—the proposals relating to whistleblowing. Of course, the Secretary of State did not address them in his opening contribution, although the Labour Front-Bench team have indicated that they will look at these issues in detail in Committee.
	The provisions in this Bill will amend the landmark Public Interest Disclosure Act 1998, which was introduced by the previous Government after many years—decades, in fact—of campaigning by those seeking to have whistleblowing legislation in this country. It put the UK at the forefront of corporate governance legislation at the time of its introduction. The Government’s amendment has the effect of introducing a public interest test into that Act, which I believe will weaken the legislation for anybody wishing to rely on it. I understand that the Government say that they are proposing this amendment in this way in order to overcome a legal loophole, which has resulted in part from the case of Parkins v. Sodexho Ltd. However, those who have been campaigning on this issue, such as Public Concern at Work, are extremely concerned that introducing this proposal in this way will weaken the legislation for everybody. There is no doubt that a loophole needs to be addressed in respect of that legal case, but the concern is that the Government’s amendment will not address it and instead will make it more difficult for anybody wanting to rely on the legislation. There is no doubt that after more than a decade of the Act being relied on in this country we need to look at this area again. There is no doubt that we need to improve the legislation and learn the lessons of experiences over the past decade and more.
	We need to look at vicarious liability, which cannot be relied on by people trying to use the 2008 Act. Recently, three nurses in Manchester who were concerned that their colleague had lied about their qualifications were unable to rely on the original legislation because it did not deal with vicarious liability.
	Other aspects highlighted by recent employment cases also need to be considered. The Government accept that there are difficulties with certain groups using the legislation, such as students on vocational placements, general practitioners and others. There is no doubt that the scope of the Act needs to be widened. Indeed, we need a separate public interest category, as there is in the United States.
	Those who have campaigned on whistleblowing are clear that the Bill is a step backwards. They are calling for a full public consultation—there has been no
	consultation whatever so far—and a thorough review of the law on whistleblowing. I ask the Government to listen to what those campaigners are saying, initiate that review, look again at the proposal in the Bill, think again, and return with proposals that will strengthen whistleblowing in this country rather than weaken it.

Iain Wright: This has been an important if somewhat curtailed debate. In the time we have had, 21 hon. Members from all parties made considered and high-quality speeches, with the exception of Lib Dem Back Benchers and Scottish National party Members, who made no speeches, high quality or otherwise.
	Since the Secretary of State rose at 5.44 pm to open the debate, 1,368 new companies have been registered in Russia, the country with the largest and fastest-growing number of business start-ups anywhere on earth; 21,394 passenger cars have been manufactured in China; 975 patents have been filed in the US; 338 people have enrolled on engineering degrees in India; and 60,000 iPhones and 20,250 iPads have been manufactured and sold around the world. Any enterprise Bill that the House considers must tackle on behalf of British business that unprecedented level of intense international competition.
	That is an urgent task because, as we have heard, we are slipping down the league tables of global competitiveness. As my hon. Friend the Member for Streatham (Mr Umunna) said in his excellent opening speech, according to the World Bank’s global survey of doing business, when the Government took office, Britain was fourth in the world in terms of the ease of doing business; it is now seventh. Across the different categories, our competitiveness is slipping alarmingly. On the ease of starting a business, we have slipped from 16th to 19th; on dealing with construction permits, we have slipped from 16th to 22nd; and on registering property, we have slipped from 23rd to 35th. We are now ranked 60th in the world on companies gaining access to electricity, behind the likes of Chile, Belize, Costa Rica, Guatemala and Iraq.
	The task is made even more urgent because the Government’s policies have pushed the British economy into reverse and into recession. As my hon. Friend rightly said, when the Government took office, the British economy was growing. Since the spending review, it has shrunk by 0.4%. We are now in a double-dip recession made in Downing street. Fifty businesses are going under each and every single day.
	The Chancellor may wish to blame the weather, even though this country has seen weather before. He may wish to blame, as he did at the weekend, high oil prices, even though oil was trading in London this morning at a 17-month low and the price of Brent crude is 25% of its March peak. He may wish to blame the jubilee, or the eurozone, which he may claim is killing Britain’s prospects for growth, but even now Tory MPs are wising up to the fact that he is looking for excuses or alibis. They are questioning the political genius and economic competence of the man who gave them the pasty tax and raised taxes for pensioners while providing tax cuts for multi-millionaires. It is not business that should stop whinging and work harder, as the Foreign Secretary suggests, it is the part-time Chancellor.
	The Bill could have addressed such failures. It has been trailed in the media as the flagship piece of legislation to make enterprise, growth and competitiveness this Administration’s principal policy. It is hardly that. Instead it is a mishmash, an ad hoc rag-bag of measures, as my hon. Friend the Member for West Bromwich West (Mr Bailey), the Chair of the Business, Innovation and Skills Committee, and my hon. Friend the Member for Great Grimsby (Austin Mitchell) said. It reflects a Government who, after only two years in office, have run out of ideas. There is no strategic thread, no compelling vision and nothing that will provide real help for British enterprise, as my hon. Friend the Member for Glasgow North East (Mr Bain) eloquently pointed out in a powerful contribution.
	The Bill’s span is wide. For example, clause 50 concerns heritage planning legislation and clause 51 deals with the Equality and Human Rights Commission. Incidentally, my hon. Friends the Members for Ayr, Carrick and Cumnock (Sandra Osborne) and for Stretford and Urmston (Kate Green) made powerful speeches about that clause. I absolutely agree with them, and we will oppose the measure firmly in Committee. There is also clause 56, which deals with copyright. That wide span does not really show an Administration confident in their approach and clear about their aims for the British economy. Instead, it exposes a situation in which Ministers are desperately trailing around Whitehall asking for off-the-shelf proposals to pad out a supposedly flagship Bill. British business deserves better.
	Businesses are crying out for a productive partnership with Government. They want to work together on a long-term vision for the British economy in the next few decades and put in place a powerful industrial strategy to allow Britain to thrive. However, there is nothing of substance in the Bill that will allow such a strategy to materialise.
	Several hon. Members, such as my hon. Friends the Members for Glasgow North East, for West Bromwich West and for Swansea West (Geraint Davies), mentioned the Bill’s provision for the establishment of the green investment bank. We support the principles of such a bank. Indeed, it was under the previous Labour Government that the decision to establish one was taken. However, this Government’s two-year delay and dither has meant that the UK is slipping ever further behind our global competitors in investment in green growth. We have fallen from third in the world for investment in clean technology when Labour left power to seventh in the world today.
	Even though I can see the point that investment rose last year, Pew Research has stated that that was largely because
	“investors rushed to initiate projects before policy reforms go into effect that could curtail incentives”—
	reforms such as the botched feed-in tariff. From a position in which we could have taken a first-mover premium in the new global manufacturing sector, the Government are losing this country our competitive advantage. Earlier this year the chief executive of Vestas, the world’s largest wind turbine maker, said that his company was postponing investment in the UK, stating:
	“The most important issue that our customers have is a long-term policy framework that is required to put in these investments, which are huge.”
	However, he said that
	“we have not had reassurance from the government.”
	As we have heard, the situation has been made worse by the fact that the Government continue to cause uncertainty and delay as a result of the Treasury’s refusal to allow the green investment bank to borrow until 2016 at the earliest. The hon. Members for Lancaster and Fleetwood (Eric Ollerenshaw) and for Stroud (Neil Carmichael)—I do not see the latter in his place—raised that issue. A bank that does not borrow cannot be called a bank, as my right hon. Friend the Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Stoke-on-Trent North (Joan Walley) said in powerful interventions. Investment and leverage from the private sector now, while the economy is in a double-dip recession, could help us get into recovery and out of this mess. As my hon. Friend the Member for Foyle (Mark Durkan) said, there is a risk that the green investment bank will not be as active a driver in economic recovery as it should.
	A large number of hon. Members, certainly on the Labour Benches, rightly mentioned their concerns about the proposed changes to employment legislation. My hon. Friend the Member for Bolton West (Julie Hilling), for example, brought to bear her considerable experience in the matter. My hon. Friend the Member for Blaydon (Mr Anderson) said that the proposals were based on bias, “Back to the Future”, opinion, anecdote and prejudice. My hon. Friend the Member for North Ayrshire and Arran (Katy Clark) mentioned whistleblowing, and we will certainly be raising and looking closely at that in Committee.
	The hon. Member for Stourbridge (Margot James) said that in her opinion health and safety legislation is a burden. I do not know whether she commemorates workers’ memorial day every 28 April, but the people who have been injured and the families who have lost loved ones will not think that health and safety legislation is a burden.
	The hon. Member for Bury St Edmunds (Mr Ruffley) cited two cases from his constituency, in the retail sector of all sectors. He said that the biggest burden facing the retail sector was not the lack of demand, the lack of consumer confidence or the rise in VAT imposed by this Government, but unfair dismissal. The idea that business growth is being held back by burdensome employment regulation is simply absurd.
	I would say to the hon. Member for Northampton South (Mr Binley)—I have a lot of affection for him and know that he has long decades of experience in business—that, as my hon. Friend the Member for Streatham said, only 6% of businesses said that regulation was the main barrier to growth, with nearly half saying that the biggest obstacle to business success was the dire state of the economy.

Brian Binley: rose —

Iain Wright: I am sure that the hon. Gentleman will agree with me.

Brian Binley: Does the Opposition spokesman, for whom I have equal affection, recognise that those people would have placed it at the very top of the list if the previous Labour Government had not created so many economic
	problems that of course other matters came before it? None the less, most people named it as one of the problems.

Iain Wright: The hon. Gentleman is a wily old bird and he knows that the economy is in recession not because of the UK employment regime or because there is somehow a need to make it easier to fire workers at will, but because, as my hon. Friend the Member for Great Grimsby said, the Government have choked off demand by cutting spending too fast and raising taxes such as VAT too far. As my hon. Friend the Member for Bolton West pointed out, removing the rights of workers will only have the impact of increasing job insecurity, thereby damaging work force morale, productivity and confidence precisely at the time when we need to see more confidence flowing through the economy.
	The Government have repeatedly and pointedly failed to rule out the prospect of Beecroft’s recommendations being brought forward as amendments to the Bill. The Secretary of State was somewhat vague on that matter. After penetrating interventions from my hon. Friend the shadow Secretary of State and my hon. Friend the Member for Stretford and Urmston, the Secretary of State said that as far as he was aware—although it is his Bill—he did not see any prospect of that occurring. I hope that the Minister will make the Government’s position crystal clear on the implementation of the Beecroft recommendations during the Bill’s passage through Parliament. I hope he will confirm that none of Beecroft’s recommendations will be in amendments tabled to the Bill and that he will work with us in Committee to ensure that any such amendments from Back Benchers will be rejected. I know that the hon. Member for Bedford (Richard Fuller) wants to table such an amendment and I look forward to working with him—or against him—in Committee.
	Hon. Members also raised the proposals on directors’ remuneration in part 6. We have made it clear that although we are generally supportive of what the Government are doing, the proposals do not go nearly far enough. We need greater accountability and transparency, and the recent shareholder spring, which involved many companies, suggests that investors believe that, too.
	Reports in the weekend media suggested that the Government will not empower shareholders with an annual binding vote on remuneration for executives, requiring it instead only every three years. Previously, the Secretary of State has rightly stated that an annual binding vote would provide investors with a powerful tool to hold executives to account, particularly as regards failure. He pledged that again today, which is very welcome. We intend to press forward in Committee with amendments to this part of the Bill to ensure that the matter is dealt with comprehensively and fairly and that all the recommendations of the High Pay Commission are implemented, including those that workers sit on remuneration committees.
	Parts 3 and 4 will establish the competition and markets authority; the purpose is to improve the speed, quality and robustness of decision making. We Labour Members are keen to ensure that the competition regime in this country is the best in the world, so that innovation and imagination are rewarded; in that respect, I agree with the hon. Member for Bexleyheath and Crayford (Mr Evennett). When the Government came to power, the UK’s competitive environment was seen as one of
	the best in the world—third behind only the US and Germany—so it is of concern that on this Government’s watch, the
	Global Competition Review
	has downgraded the status of the Office of Fair Trading, following what it termed the OFT’s “dismal” enforcement on cartels. In Committee, we will scrutinise closely and challenge the Government’s proposals to ensure that our competition regime remains best in class.
	The Government had a great opportunity in this Bill to deal with the consequences of their failed economic policies. The Bill was a chance to put in place legislative measures to enhance this country’s economic competitive position, and to set in train policy certainty for investors, which would allow them to invest for the long term. The Bill could have helped our companies to improve their productivity and decarbonise the economy, while allowing British firms to benefit from the green industrial revolution, which is happening now—not in 2016. It could have made a firm statement in law that failures and poor performance at the top of business would not be tolerated or rewarded with excessive pay, and it could have safeguarded consumers from powerful vested interests. The Bill has made some progress on that, but not nearly enough. It is a missed opportunity. It is a rag-bag that exposes the Government’s lack of a compelling vision and fails to help British business to compete in the global economy of today and tomorrow. On that basis, I commend the reasoned amendment to the House.

Norman Lamb: I have to say that I did not agree with much that the shadow Minister, the hon. Member for Hartlepool (Mr Wright), said, but I do agree that it has been a good debate, with many reasoned contributions from Members on both sides of the House, which I very much welcome. I will try to address as many of the points made as I can. There will obviously be further opportunities at subsequent stages to discuss detailed points.
	Contrary to what the Opposition have argued, the Bill contains important measures that will encourage long-term growth. As my right hon. Friend the Secretary of State explained in opening the debate, part of the Government’s wider strategy is to promote growth, support business and create jobs. The Government inherited a wholly unbalanced economy based very much on consumer debt and a housing bubble. It created six new regulations every working day. Those are not the actions of a business-friendly Government.
	I shall deal first with the green investment bank. I am glad that Members support its creation. As my right hon. Friend made clear in his opening speech, the bank’s expertise will break new ground in the financing of green infrastructure projects, while demonstrating to the market that such investments can deliver commercial returns. The Government have made good progress in building the bank, so that it can make investments as soon as state aid approval is received. The establishment of the bank is testimony to the leadership of this Government in rebalancing the economy and putting the green agenda at the heart of that project.
	The shadow Secretary of State and the hon. Members for West Bromwich West (Mr Bailey), for Stoke-on-Trent North (Joan Walley), and for Glasgow North East (Mr Bain) raised concerns about the funding, and the
	borrowing powers, of the bank. The Government have committed to the bank having £3 billion of funding up to 2015. The bank will have borrowing powers thereafter, subject to public sector debt falling—an entirely reasonable proposition. That deferred ability to borrow from 2015 will not affect the success of the green investment bank, as it first needs to focus on consolidating its expertise and developing a credible track record.
	UK Green Investments has already made investments in waste infrastructure projects, and is considering major investments in priority sectors such as offshore wind. Private sector investors have responded very positively, and it is already clear that the bank will make a major contribution to the ability and willingness to invest in the green economy.
	I turn now to the measures aimed at reforming the employment tribunal system. I welcome the acknowledgement by the hon. Member for Streatham (Mr Umunna) on a previous occasion that improvements can be made to the way in which the system operates, but the shadow Secretary of State today seems set against any reform and fails to recognise that other countries, including a social democrat Government in Germany, have made reforms to make their labour markets more flexible. We cannot afford to be complacent. Labour in government recognised the value of a relatively flexible labour market. Our labour market already performs well, but if we want to remain competitive it is imperative that we are aware of what other countries are doing.

Chuka Umunna: rose—

Norman Lamb: As my hon. Friend the Member for Bury St Edmunds (Mr Ruffley) said, we must balance the interests of those who are in work with the interests of those who have no job and no prospects. We have to provide a mechanism to ensure that employers have the confidence to take on new employees.

Chuka Umunna: Will the Minister give way?

Norman Lamb: I am afraid I do not have time. I need to get through the responses.
	This Government are determined to support parties to resolve their disputes between themselves, rather than relying on a costly and time-consuming employment tribunal. A tribunal is an admission of failure and everything must be done, where practical, to prevent having to resort to it. The mediation of disputes retains employer flexibility while preserving workers’ rights and dignity, and our measures aim to encourage that further.
	There has been much discussion today and in the past weeks about the proposal contained in the report prepared by Adrian Beecroft on compensated no-fault dismissal. I have made my views on the proposal very clear. This is not a measure in the Bill and therefore is not a matter on which I propose to dwell in the limited time available to me. Suffice it to say that the call for evidence has closed and my officials will be considering the responses received. I am clear, however, that we need to take action to improve the way in which businesses, especially small businesses, manage and end their relationships with employees. By addressing the fears that small businesses
	tell us they have about ending up in an employment tribunal, we can help unlock the growth that we so desperately need.
	By extending the qualifying period for unfair dismissal from one to two years, we have already taken action to increase the period that employers have to decide whether a new employee is the right one for the job, but we need to provide a solution where problems occur and where the qualifying period has been exhausted.
	The shadow Secretary of State asked whether any more elements of the Beecroft report would be implemented through the Bill. We do not intend to table any further amendments prompted by the recommendations in the Beecroft report.
	My hon. Friend the Member for Bury St Edmunds raised the question—the case, as it were—of exemptions from employment regulations for small businesses. I am not sure whether he is in the Chamber. The evidence from Germany is that when the reform was introduced to reduce employment protection for companies of up to 10 employees, it had no impact on the number of people employed in small businesses. It therefore seems that the evidence in favour is highly questionable.
	On the measures we are proposing on settlement agreements, the all-party group on micro businesses, in its response to the call for evidence on compensated no-fault dismissal, for which I am extremely grateful, supported the idea that employers should have the option of using
	“a new simpler route to end employment relationships”.
	The all-party group states that in return for compensation employers should
	“be able to terminate a contract with an employee without going through a performance review and dismissal process. … this should be an option that is voluntary but which employers are freely able to propose to employees without fear of being taken to court.”
	We agree almost entirely with that sentiment. I appreciate the comments of the hon. Member for Skipton and Ripon (Julian Smith) in the debate today. I say “almost entirely” because there is one important difference: we do not think that this option should be available only to micro-businesses. Therefore, we will table a new clause in Committee to ensure that an offer of settlement cannot be used against an employer, any employer, in an unfair dismissal case, which will give businesses the confidence to talk to their employees about bringing the relationship to a swift end through the use of a settlement agreement.
	The shadow Secretary of State raised a concern about trust and confidence in the employment relationship, but he will be aware that many businesses, probably including his former clients—big companies that probably paid him substantial hourly rates—regularly use compromise agreements. We want to ensure that all businesses, including small and medium-sizes businesses, can use those agreements. If there is no agreement, the employee’s rights are still protected. They have to work together to ensure that the employment relationship is maintained.
	My hon. Friend the Member for Northampton South (Mr Binley) raised concerns about SMEs. We will shortly consult on a suite of proposals to help small businesses use settlement agreements to ensure that they have the confidence to deal with employment problems. I hope that that reassures him.
	Reference was made to unfair dismissal compensatory award proposals. There has been debate about the power to amend the limit on unfair dismissal compensatory awards. The Labour party wants to make mischief on the issue, but I should point out that it is a matter of common ground that there should be a limit on the amount of the compensatory award. Having proposed removing the limit back in 1998, the then Government backtracked and elected instead to have a large, one-off increase from £12,000 to £50,000 and introduce a formula for future increases. As a result, the limit has increased rapidly in recent years and now stands at £72,300. That is greatly in excess of the median award for unfair dismissal, which is less than £5,000. Realism about potential awards is clearly important for encouraging the settlement of employment disputes and the greater use of settlement agreements.
	I want to say a few words about competition. The Government believe that creating a new competition and markets authority will ensure that resources and specialised competition expertise can be deployed to best effect while reducing the burdens on business, and I was pleased that the shadow Secretary of State supported that principle. This matters for the taxpayer and for businesses and consumers at the wrong end of anti-competitive practices. The Government recognise that a great strength of the current regime is the two-phase approach to markets and merger cases and wish to preserve it. We will therefore retain the separation of decision making; the board will have responsibility for the initial investigation and phase-1 decisions, and groups of independent panellists will continue to make final decisions at phase 2. When making those decisions, the groups will be required to act independently of the board, which will ensure that decisions are robust by giving cases a second look and bringing in the use of experienced business people and other outside experts. There will also be scrutiny by the Competition Appeal Tribunal.
	The Bill is pro-growth and pro-business. We have listened to small and large businesses across the country, the businesses on which this country’s recovery depends. They have told us that fair and speedy ways of resolving disputes matter to them. We have listened and are delivering the measures that matter to them. A strong and effective competition regime matters for business. Reducing the excessive burden of regulation, much of which was introduced under the previous Administration, and the cost of compliance with regulation matters for business. The Bill will help businesses to grow and succeed. It will boost consumer and business confidence and help the private sector create jobs. It will promote fairness and support our green economy. I commend it to the House.

Question put, That the amendment be made.
	The House divided:
	Ayes 216, Noes 301.

Question accordingly negatived.
	Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.
	Question agreed to.
	Bill accordingly read a Second time.

ENTERPRISE AND REGULATORY REFORM BILL (PROGRAMME)

Motion made, and Question put forthwith, (Standing Order No. 83A(7)),
	That the following provisions shall apply to the Enterprise and Regulatory Reform Bill:
	Committal
	1. The Bill shall be committed to a Public Bill Committee.
	Proceedings in Public  Bill  Committee
	2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 17 July 2012.
	3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
	Consideration and  Third  Reading
	4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
	Other  proceedings
	7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Angela Watkinson.)
	The House divided:
	Ayes 301, Noes 213.

Question accordingly agreed to.

Enterprise and Regulatory Reform Bill (Money)

Queen’s recommendation signified.
	Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
	That, for the purposes of any Act resulting from the Enterprise and Regulatory Reform Bill, it is expedient to authorise—
	(1) the payment out of money provided by Parliament of any expenditure incurred under or by virtue of the Act by the Secretary of State or the Competition and Markets Authority;
	(2) the payment out of the National Loans Fund of any sums payable out of the Fund by virtue of the Act;
	(3) any increase attributable to the Act in the sums payable under any other Act out of money provided by Parliament.—(Angela Watkinson.)

Enterprise and Regulatory Reform Bill (Ways and Means)

Queen’s recommendation signified.
	Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
	That, for the purposes of any Act resulting from the Enterprise and Regulatory Reform Bill, it is expedient to authorise the payment of sums into the Consolidated Fund. —(Angela Watkinson.)

Business without Debate
	 — 
	Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Pensions

That the draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012, which was laid before this House on 26 March 2012, in the previous Session of Parliament, be approved.—(Angela Watkinson.)
	Question agreed to.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

National Health Service

That the draft Health and Social Care Act 2008 (Regulated Activities) (Amendment) Regulations 2012, which were laid before this House on 27 March 2012, in the previous Session of Parliament, be approved.—(Angela Watkinson.)
	Question agreed to.
	Motion made, and Question put forthwith (Standing Order No. 118(6)),

London Government

That the draft Greater London Authority Act 1999 (Amendment) Order 2012, which was laid before this House on 19 March 2012, in the previous Session of Parliament, be approved.—(Angela Watkinson.)
	Question agreed to.

Backbench Business Committee

Motion made,
	That Mr David Amess, Mr David Anderson, Bob Blackman, Jane Ellison, John Hemming, Mr Marcus Jones and Ian Mearns be members of the Backbench Business Committee.—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)

Hon. Members: Object.

Mr Speaker: We are all struck by the speed with which the hon. Member for Christchurch (Mr Chope) has registered his objection.

Education

Ordered,
	That Tessa Munt be discharged from the Education Committee and Mr David Ward be added.—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)

Science and Technology

Ordered,
	That Jonathan Reynolds be discharged from the Science and Technology Committee and Jim Dowd be added..—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)

DEMENTIA SERVICES (SOUTH-WEST)

Motion made, and Question proposed, That this House do now adjourn.—(Angela Watkinson.)

Mr Speaker: Before I call the right hon. Member for Exeter (Mr Bradshaw), perhaps I could appeal to Members who are leaving the Chamber—unaccountably not wishing to remain to hear the right hon. Gentleman’s speech—to do so quickly and quietly, affording the same courtesy to the right hon. Gentleman that they would want to be extended to them.

Ben Bradshaw: Thank you very much, Mr Speaker—and thank you very much for granting a debate on a subject that is of great concern to my constituents in Exeter, to people throughout the south-west, and, indeed, to people throughout the country. My own mother suffered from dementia, and died very young when I was just 18. That was in the days when Alzheimer’s and other dementias were only just beginning to be recognised. Since then we have made great strides in terms of our knowledge and understanding, and the treatment that is available to sufferers and their families. I pay particular tribute to the Alzheimer’s Society for its campaigning work and the support that it provides for people.
	There are currently 800,000 people with dementia in the United Kingdom, and one in three of us will have it by the end of our lives, so this is an issue that touches, or will touch, virtually every household and every family in our country. Although progress has been made, there are still big gaps and unacceptable variations in levels of service and support, and I shall focus on three issues that cause particular concern: the rates of diagnosis; the availability of drugs for sufferers; and the overall resilience of the care system, on which many dementia sufferers and their families depend.
	Everybody—including, I am pleased to say, the Government—accepts that early diagnosis is absolutely vital in ensuring that people with dementia and their families receive the information, treatment and support they need. At present, however, fewer than half—43%—of dementia sufferers have a formal diagnosis, and in the south-west that rate is even lower; in fact, my region has the lowest diagnosis rate of anywhere in England at just 35.4%, with my own county, Devon, having barely a third of sufferers diagnosed and Dorset having the lowest rate in the country at just 27%. As the south-west of England has a higher than average proportion of elderly people, and therefore more dementia sufferers, that is extremely worrying. Indeed, according to the Minister’s own figures, in Devon alone there are almost 9,000 people with dementia who have not been diagnosed. In contrast, average diagnosis rates across Northern Ireland are above 60%, and in Belfast the rate is almost 70%. What is the Minister’s explanation for this huge variation in diagnosis rates across the country, and what are his Government doing to address that?
	Many fear that the Government’s upheaval of the NHS might make this situation even worse, not better. Putting GPs in the driving seat means that the level of awareness and understanding of the problem among GPs will be more important than ever. GP training is therefore vital, and I welcome the progress that is being made, such as in Devon, where an education programme
	for GPs has reached 374 practices across our county, and there are already signs of increased diagnosis rates. But education alone is not enough. GPs need to have access to help and support, but the key to improving diagnosis rates in the south-west will be to ensure that GPs can refer patients to memory services for diagnosis. I have heard reports of people waiting over a year for an appointment at a memory clinic, however.
	As the Minister will be aware, the Alzheimer’s Society recently wrote to all MPs asking us to write to our local primary care trusts in order to establish waiting times at memory services in their areas. I commend this initiative. Will the Minister say whether the Department of Health collects data on waiting times at memory services in the south-west—as well as in other regions? If not, will he arrange for NHS South of England to provide Members with this information?
	The Royal College of Psychiatrists has established the memory services national accreditation programme, to ensure that services at memory clinics meet national standards. Does the Minister agree that all memory services should seek such national accreditation and that that should be a priority for local NHS managers?
	As the Minister will also be aware, next month the all-party group on dementia will report on its inquiry into improving diagnosis rates. I understand that he has been invited to the launch of the report, and I hope he can confirm tonight that he will be able to attend.
	The second issue I want to highlight is the variation in the availability of medicines for dementia sufferers. These medicines can make an enormous difference both to the progression of the illness and the quality of life enjoyed by the sufferer and their carers. The Minister will be aware of the massive—some reports have suggested as much as 50-fold—variation in the level of drug prescribing among PCTs in England. Again, the south-west does very poorly. We are not the lowest region in England in respect of prescribing, but we rank as the second lowest region after the west midlands. It is very worrying that our region, with its high proportion of elderly people and therefore of dementia sufferers, has the second lowest level of availability of medicines that could help them. Will the Minister explain the reasons for that, what the Government are doing about it, and how he can guarantee that this problem will not get worse under the Government’s reorganisation of the health service?
	The third and final concern I wish to raise tonight is the financial hardship faced by dementia sufferers and their families because of the cost of long-term care. We know that, in some cases, that can run into hundreds of thousands of pounds; it can lead to families losing their homes or their inheritance because of the lottery of getting dementia. Many people rightly feel that that is deeply unfair. In my view, the long-awaited report by Andrew Dilnot on the future of long-term care provides a sustainable and equitable solution to that deep unfairness that some families face and to the general challenge of providing long-term care.

Alison Seabeck: This is an incredibly important debate and my right hon. Friend has touched on a number of issues that affect my constituents. In a recent case, the mother of Lee Finn was in Derriford hospital with dementia; the family came in and read her chart—they had power of attorney—
	and saw that it said “Do not resuscitate”. The family had not been asked or consulted in any way. Does my right hon. Friend share my concern that, although there is some fantastic work going on in the field of dementia, crass errors continue to be made that cause families deep unhappiness? It is clearly not good for the dementia sufferers if the whole family is destabilised because of poor decision making.

Ben Bradshaw: I agree absolutely. As I said, and as I hope the Minister will endorse, training and awareness of dementia are vital not only in primary care settings but in secondary care settings, as in the case my hon. Friend raises. Some people who may seem to be extremely ill with dementia and who are in the situation she describes may in fact be physically perfectly fit and able to carry on living for some time. I hope that her local hospital will take up the case and provide a satisfactory response.
	As I was saying, there is a strong feeling on both sides of the House that we need a sustainable and fair solution to the challenge of long-term care. That challenge particularly, but not solely, affects families with members who suffer from dementia because of the enormous costs imposed on them by having to pay for long-term care. I do not think it an exaggeration to say that there was great disappointment when the Queen’s Speech again failed to include a Bill to implement the Dilnot proposals. As far as it goes, the Government’s commitment to a draft Bill was welcome, but it would be helpful if the Minister told us when that draft is likely to be published and guaranteed that a Bill will be passed in this Parliament. May I boldly suggest that that would be a real legacy and worth working for?

Julie Hilling: Does my right hon. Friend agree that part of the reason people are not diagnosed is the great fear of what dementia means? In fact, if we provided good care in their own homes, they could stay there longer before needing to go into residential care. We should look not only at the cost of residential care, but at the cost of home care and reach a settlement on that, too.

Ben Bradshaw: My hon. Friend is absolutely right and makes an important point.
	I would be grateful if the Minister also gave a commitment that the Bill, when it comes to the House, will address the postcode lottery in the availability and quality of services. Tower Hamlets in London, for example, spends five times as much on dementia services as Cornwall in the south-west, which is the lowest spending authority in the country. That simply cannot be right.
	The urgency of meeting the challenge of long-term care is all the greater as figures uncovered by my hon. Friend the Member for Leicester West (Liz Kendall) show that pressure on local authority budgets is already leading councils to increase their charges and tighten their eligibility criteria, so that many people are losing the assistance they previously received. The situation is getting worse and will continue to do so until the Government grasp the nettle of long-term care and implement the Dilnot report.
	At any one time, one in four hospital beds is taken up by people with dementia. Delayed discharges from hospital and unnecessary admissions to hospital cost every hospital
	in the south-west hundreds of thousands of pounds a year. As my hon. Friend the Member for Bolton West (Julie Hilling) has just said, all the evidence shows that early intervention with community services is cost-effective, it keeps people out of hospital, it is what people with dementia and their families want, and, in particular, it is what the people who have the main responsibility for caring for those sufferers want.
	However, the tightening of the eligibility criteria and the cutting of local services are having the opposite effect: they are increasing the costs for the NHS. I do not know whether the Minister has any figures with him. If he does not, perhaps he could write to me, as I would be interested to know whether he has made an assessment of the impact on the NHS in the south-west of the tightening of eligibility criteria by local authorities in the area for people with dementia.
	By 2021, more than a million people will be living with dementia in the UK, and this year dementia is set to cost us £23 billion. In the next 10 years, the number of people in Devon with dementia is set to increase by a third. It has been said before, but I will say it again: we face a dementia time bomb. Addressing it will require leadership and more public investment in the short term, but a successful dementia strategy will be much cheaper and equitable in the long run, and it will also reduce the strain on and suffering of patients and their families. Surely it cannot be too much to expect that someone with dementia can receive a decent level of care wherever they live in the country and that their families should no longer to be subjected to the ruinous costs of long-term care simply because they happened to have a relative who suffered from this illness.

Paul Burstow: I congratulate the right hon. Member for Exeter (Mr Bradshaw) on securing this debate. He is absolutely right to highlight the importance of the issue of dementia. It is, without doubt, one of the biggest health and personal issues affecting our society today, and it will touch the lives of many families in this country. He rightly rehearses the statistics, and dementia is a priority for this Government. We know that in England there are 670,000 people living with dementia, that the figure is set to double over the next 30 years and that in England the cost of dementia to society as a whole is about £19 billion. However, the true costs of dementia are incalculable. I am talking about the cost in terms of the impact on people’s lives, the lost opportunities and the consequences of taking on a caring responsibility within the family, and the costs and consequences for the individual. As has been said in this debate, we know that cancer has been replaced by dementia as the disease that people in their 50s now fear the most, and the right hon. Gentleman has highlighted a number of reasons for that.
	That is why, on 26 March, the Prime Minister, on behalf of this coalition Government, set out this Government’s dementia challenge: to go further and faster in implementing the previous Government’s dementia strategy; to focus, in particular, on the issue of diagnosis rates; to raise awareness and ensure that we prepare our society to be adapted and adaptable to the needs of
	people with dementia; and to double the research funding available in the area of neurosciences and dementia by 2015.
	The dementia challenge builds on the previous Government’s work on the national dementia strategy. We kept and built on that strategy, rather than losing any of the momentum that it put in place. I pay tribute to the Alzheimer’s Society for the work it does, and we are working closely with it. We have brought together three champion groups that are taking forward the work on raising the need to improve diagnosis and the treatment and care of people so diagnosed. We are also focusing on issues associated with how we raise awareness, both within the social care and health care work forces and in wider public services. Finally, we are working with the research community to improve capacity significantly and make sure that we have more good quality bids for funding for dementia research in this country.
	On the recognition of dementia, we need to ensure that the challenge is not just for the national health service or social services departments, but for our whole society. Work is being led by the Alzheimer’s Society and one of its key champions and ambassadors, Angela Rippon, on how we create dementia-friendly cities, towns and villages. The county of Devon is taking a lead working with schools so that young people better understand dementia and get involved in services supporting people with dementia in the community.
	The Government have laid the foundations for dementia research, investing heavily in biomedical research centres and seeding the necessary interest among the research community through themed calls. Something in the region of £17 million of new money is now going into research.
	The right hon. Gentleman is right on diagnosis: there is still inexplicable and unacceptable variation within his own region, let alone across the whole of England. In 2011, 30,000 people had been diagnosed and were living with dementia in the south-west, which is among the lowest rates in England. However, we know from the figures that the movement is in the right direction. It is not as fast as he would like, nor as fast as I want it to be in future, but in 2010, the diagnosis rate was 35.4%; by 2011, it had risen to 37.3%.
	The Government are ensuring through our dementia challenge that general practitioners and other health professionals are referring more people for assessment. We are making people aware of the availability of memory services and targeting hospitals to ensure that they receive extra resources to undertake dementia risk assessments of people over the age of 75. There will be additional resources to support that activity. We are confident that it will lead to a significant increase in the numbers of people being both diagnosed and referred for diagnosis.
	The right hon. Gentleman referred to the Royal College of Psychiatrists accreditation programme. I endorse what he said. It is important that more memory services seek that accreditation, and many in his region are doing just that.
	I can tell the right hon. Gentleman that there has been a further acceleration in progress on diagnosis. Devon commissioners tell me that, in the past year, Exeter has been among the strongest performers in Devon in improving its rate of diagnosis. Indeed, there
	was an 11.6% increase in the number of people receiving a diagnosis in the county. The local NHS is building into its commissioning plans for the coming year an improving diagnosis trajectory. I hope that he and other hon. Members continue to hold local commissioners to account for their commissioning decisions on dementia.
	The right hon. Gentleman referred to Northern Ireland and the reasons for its success. One reason Northern Ireland has been successful is that it has invested heavily in its community and voluntary sector services, which has played a part in raising community awareness. More people have in turn asked whether they need to be referred to a memory service. That is one reason why the Government have sponsored an advertising campaign. We want to raise awareness and get families to talk about dementia, and not to put it off or believe that it is just a consequence of ageing.

Alison Seabeck: What the Minister says about Northern Ireland and the figures for Devon is interesting. Does he believe there is a connection between dementia diagnosis and support and the relative stability of a population, such as that of Belfast? Devon has a more transient population, and people move there to see out their old age, perhaps away from their families. How important is proximity to family and close friends in terms of diagnosis and support?

Paul Burstow: That is part of the Government’s approach to raising awareness. We recognise that getting families to have conversations when they see the first signs of memory loss, or other behaviours that might indicate dementia, is an essential part of getting people to have a conversation with their GP about referral to a memory service. Whether that is to do with more stable communities is an interesting question to consider further. We are working with the research community because we want to encourage more applications for social research as well as research into the underlying causes of the disease.
	The right hon. Member for Exeter asked about waiting times. Although there have not historically been routine central collections of waiting times, we will have to consider the matter closely. The Government are keen to drive improvements, and it is no good somebody getting a referral if they and their family are then left hanging for too long. He made an important challenge on that matter.
	The right hon. Gentleman rightly talked about support for families. In the operating framework for the NHS, which we published last December and which covers this year, we were absolutely explicit that NHS organisations must work with local authorities and carers’ organisations to get their sign-off for their plans for carers. We stated that they must be explicit about the number of carers’ breaks they will provide and the budget that they allocate for carers in their area. We need to ensure that carers get vital breaks, rather than having to have a breakdown before the NHS picks up the pieces.
	From next year, we will also expect NHS organisations to demonstrate that they are supporting carers of people with dementia in line with the guidance that the National Institute for Health and Clinical Excellence issues. Early diagnosis is important because families and the individual themselves need to be able to plan, but also because NICE’s guidance on medication states that people need access to drugs at an early stage. I will write to the right hon. Gentleman about the variations that exist.

Julie Hilling: What are the Minister’s views on the funding of dementia groups and carers’ groups? I visited my local group a fortnight ago, and it is struggling for money because of cuts in its local authority grants and health grants. Will there be money behind the new strategy for carers, and more money to support dementia groups in the community?

Paul Burstow: I say two things in response to that question. First, the picture is actually quite varied, and I will come on to the investment that is being made in the support network of voluntary and community organisations in Devon. Secondly, the Government have provided £400 million, through the NHS, to support carers through carers’ breaks and other arrangements. We have specifically said that local plans will have to be signed off by carers’ organisations to ensure that the voice of carers is heard when decisions are made.
	The right hon. Gentleman asked me about the costs facing families. I understand that concern, which the House has been debating for at least the past 15 years, and it is important that we reach conclusions. We will shortly publish a White Paper and a progress report on our deliberations on funding reform. Dilnot produced a clear set of recommendations, which the Government welcomed when they were published last year.
	It is also important to stress that funding reform, important though it is, is only one of a number of issues to consider in improving social care in England. Others include variability of quality, a lack of focus on prevention and early intervention, services that do not join up well for families and do not always integrate well with the NHS, and a lack of personalisation. We expect to address all those issues in the White Paper that we will publish shortly.
	When it comes to legislation, we will publish a draft Bill before the summer recess, which will set out the details of a comprehensive reform of social care. We will address the fact that for 60 years, social care legislation in this country has evolved in a piecemeal fashion and as a consequence, in my view, constitutes something of a dog’s breakfast. It is hard for people to navigate their way around the system and identify when they are entitled to support from their local authority and when they are not.
	Innovation is important in driving improvements in quality for people with dementia. That is one reason why, as part of the dementia challenge, we identified an innovation prize of £1 million for NHS organisations developing ideas for the transformation of dementia care services. In the south-west and south of England, the NHS has specifically identified and made available a further £10 million for such innovations.
	I said that I wanted to mention briefly some of the other actions in the south-west. The Royal Devon and Exeter NHS Foundation Trust has piloted patient passports in a very good piloting exercise. It has alighted on a scheme proposed by the Alzheimer’s Society called “This is me” passports, which are very useful for people with out-patient appointments and those who are being discharged from hospital. The trust is also running an “An hour to remember” training programme to raise the awareness of staff about both the people who have dementia and the people who are with them—that is, their family members and carers—and that is ever so critical. Every fortnight, there is a day’s training in
	dementia care for clinical and ancillary staff. The trust has also recently strengthened its mental health liaison services and is reaching out into its communities to pilot a virtual ward scheme, which is a very important way of avoiding unnecessary admissions into hospital. Beyond the hospital, there are networks of support and there are 37 memory cafés around the county—I believe that there is one in Exeter itself—and more than 200 volunteers have been trained in dementia awareness to help support those areas.
	The right hon. Gentleman also mentioned the role of GPs. I am not certain that we have the same figures, but my understanding is that 67 of the 107 GP practices across Devon have already undergone GP-led dementia training, which has already led to a significant increase in the number of referrals going through.
	There is much to be done and much that the Government are doing already. There are significant signs of progress up and down the country. The dementia challenge set out by the Prime Minister in March is real and it is about ensuring that we mobilise not just the national health service and our local authorities but our whole community to engage with one of the biggest challenges faced by our society. I would certainly say that the evidence points towards a lot of hard work being done by NHS and social care professionals across Devon and the south-west that is beginning to lead to a significant increase in the diagnosis rates. As a consequence, many more people are getting the treatment and care that they need and that their loved ones deserve. I thank the right hon. Gentleman for securing this debate.
	Question put and agreed to.
	House adjourned.